At the end of the next week, data on the US labor market will be published. However, expectations of a decline in US unemployment and job growth could lead to the dollar strengthening against major currencies.
In addition to macroeconomic factors, the technical factor of the proximity of the three-year lows of the dollar index will contribute to the dollar’s growth.
The growth of the dollar and political events are also favorable. The main one is the confrontation between the United States and China, which has moved to the area of the disputed territories of the South China Sea, as well as the problems of the Eurozone.
At the end of the outgoing week, Germany unexpectedly refused to discuss the Brexit topic at a meeting of EU Foreign Ministers. Instead, an unscheduled speech by Brussels negotiator Michel Barnier was announced. According to insider information, the official can make it clear about the readiness of the European Union to restore borders without conditions.
This alignment will negatively affect all European currencies, especially the pound will suffer. The pressure on Germany comes after Boris Johnson’s announcement of his resignation. The British Prime Minister, a champion of a tough break with the EU, was unable to recover his health after suffering from the coronavirus.
Due to illness, his Japanese colleague, Shinzo Abe, left his post. This puts the yen on a separate row for next week. The exchange rate can change unpredictably during the selection of a successor to the post of Prime Minister of Japan.
The strengthening of the dollar can be reversed by the success of the third stage of vaccine trials in China and the UK. Positive news will boost demand for risky assets. Additional support for stock markets and the growth of major currencies will be provided by oil. Increased energy demand could be triggered by a hurricane that halted 85% of US production.
In this case, it is worth paying attention to the Asian currencies of countries with a high Central Bank rate. Investors are actively investing in their bonds, fleeing the zero rates of developed countries. Financial inflows will significantly strengthen the rate of exotics in the Asia-Pacific region.