HSBC’s Bloom Shares His Views On Global FX Market At Malta Event

David Bloom, a top forex strategist recently spoke at a HSBC Bank Malta event and shared his views on the current state of the global forex market and how upcoming events such as Brexit is going to impact the forex industry.

Bloom is widely recognized and highly credentialed in the forex industry. He currently serves as the global head of forex at HSBC Global Research. One of this first things he discussed during the event was a research paper published by HSBC titled “Synchronized Global Sinking”. This is a pessimistic look at what a many think is a good thing: rising global growth rates.

Bloom is one of the few experts who state that a growing market is a bad thing. He feels this way because he believes that as the world synchronizes global growth, this can cause upward pressure. For example, it could raise oil prices and commodity prices and will put a squeeze on the economy as it gets more difficult as people scramble for the same resources.

This will impact forex markets as when global growth stutters then central banks in Sweden, Japan and the Eurozone who have not raised their interest rates will face an economic downturn and their associated currencies will also weaken.

Mr. Bloom moved on to explain how currencies are evaluated for forex and other financial markets. There are three factors to look at. First, the structural factor looks at the country’s economic foundations that include its GDP and more. Second is the cyclical factor which is its daily movement in the market. Finally, there’s the political factor which one must take into consideration as a country’s politics can affect the performance of a currency.

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Cyclical vs. Political Factors

According to Bloom, the cyclical factor is very influential at the moment. This is what is pushing the dollar’s strength right now. This bodes some bad news for the pound sterling as the British economy is expected to slow down because of Brexit.

Bloom pointed out that the cyclical factor may not be at the top in the near future though. Politics is slowly becoming more influential in forex and its impact on currency prices seems to be much more extreme. He also said that he found it strange that there was no wage pressure when unemployment rates were so low.

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