February 15-19, 2021. Volatility is increasing

2021-02-14

In the coming week, the rate of the major currencies will be determined by the Fed’s decisions. The topic of accelerating inflation becomes relevant on the eve of the infusion of $ 1.9 trillion into the US economy “Biden’s help”, traders are waiting for the FRB bankers to explain how the rate will rise in this case.

The dollar will rise if the Fed confirms its intention to raise the rate upon reaching the inflation threshold of 2%, and will fall if there is a desire to continue easing monetary policy above this value. The American currency will also be supported by the implementation of the vaccination plan for the population by April, proved by stable production volumes of US-approved vaccines.

It should be noted that it is difficult to make unambiguous forecasts this week due to the release of a large number of economic indicators for European countries. Business activity indices, employment rates, ZEW indicators and ECB minutes will have a contradictory impact on the rates of European currencies.

The arrival of Mario Draghi as prime minister, negotiations between the EU authorities and the United States on lifting Trump’s sanctions and duties on Eurozone goods can also play a significant role and raise the euro exchange rate.

February 8-12, 2021. We expect a correction

2021-02-07

A strong correctional movement of the dollar is expected in the coming week, and the local growth of major currencies associated with it. This is due to the intense strengthening of the dollar in the previous week. These trends will intensify the redistribution of capital across the stock markets of developed and developing countries.

Investors are counting on a rise in securities prices due to the decline in the dynamics of the incidence of Covid-19 and an increase in the volume of vaccinations of the population. The industry and the service sector are gradually “reviving” as evidenced by the growth in consumption and cost of energy resources, as well as economic statistics of the labor market.

Special attention should be paid to the euro this week. Currency quotes may rise if the crisis of power in Italy is successfully resolved. The well-known economist Mario Draghi, who is forming a technical Cabinet of Ministers far from politics, has been thrown to save the country’s economy.

February 1-5, 2021. Weakening trends in the dollar

2021-01-31

The economic news of the coming week will determine the trends of the major currencies against the dollar. Thus, the dollar may stop the current strengthening due to the weakening of the PMI indices in the US, which in European countries can show growth.

The delay in accepting the aid package from Joe Biden will further exacerbate the fall of the American currency. Investors were looking forward to swift approval of a $ 1.9 trillion allocation from the new president, whose party controls both houses of the US Congress. Janet Yellen, who took over as finance minister, could also weaken the dollar if she expands the government bond program.

This scenario can be reversed by clearing up the thesis of an increase in the negative rate of the ECB, thrown last week by the head of the Central Bank of the Netherlands, as well as increasing problems with the supply of vaccines in the Eurozone. The expanded vaccination campaign has not yet led to a decrease in the incidence of Covid-19. European countries are closing borders, extending lockdowns.

The pound may rise in the coming week, if during the meeting of the Bank of England, the head of the Regulator confirms the distant prospect of zero rates.

January 25-29, 2021. Old trends continue

2021-01-24

There were many high-profile events in the past week. For example, Joe Biden’s inauguration, which, thank God, passed without incidents, rallies and riots. The new US president immediately began to reverse some of Donald Trump’s decisions and decrees, showing that he fundamentally disagrees with his policies. There is a tendency in Biden’s actions to return to the order established at the time by Obama. Obama’s influence on Biden’s actions is clearly visible. Given Obama’s physical youth, it can be assumed that he will actually be the shadow president. This means that the course of America as a whole will remain the same. However, there may be a lot of factors determining the direction of the dollar’s movement. But they are more likely to form short-term trends, while the trends of high timeframes will remain the same. Also last week, the ECB held a meeting, at which not a single important decision was made. Thus, the most important was the press conference with Christine Lagarde, and not the outcome of the meeting. However, Mrs. Lagarde also did not report anything fundamentally new to the markets. As usual, the talk was about the high euro exchange rate, low inflation, threats and risks associated with the “coronavirus” pandemic. In addition, Janet Yellen, the former head of the Fed and now the US Treasury Secretary, delivered a lengthy speech this week. The most important thesis voiced by Yellen was the rejection of attempts to influence the American currency rate, as it was under Donald Trump. According to Yellen, her department will not interfere with the exchange rate of the dollar. In general, as we can see, there were many interesting events, but none of them had a special effect on the dollar rate. Most of the week, the euro was growing, continuing the trend of the last 9-10 months. There is also nothing special to single out from macroeconomic statistics. Inflation in the EU remained at a negative level. Business activity in the service sector remained below the 50.0 level. Nothing unexpected happened. Therefore, the overall situation on the markets remains unchanged, and we can assume that the old trends will continue.