The foreign exchange market in the coming week will be under pressure from the unpredictability of Brexit negotiations, an increase in the incidence of Covid-19, a protracted process of transfer of power in the United States, and disputes over a second aid package in the US Congress.
The combination of the above factors is a clear signal for the strengthening of the dollar. The US Federal Reserve Protocols are capable of strengthening or reversing this trend, where investors expect to see signals of expansion of market support. In this case, the dollar will give up its positions in favor of the growth of major currencies, among the dynamics of which the euro, pound and yen should be highlighted.
The EU countries will continue to fight for the adoption of the seven-year budget, blocked by Poland and Hungary. In the current version, both states are at risk of not receiving the coronavirus aid planned in the document due to problems with “European values.” This is not the first time this problem has arisen, and the EU has already proven that it can quickly reach a compromise. The adopted budget will be a signal for active purchases of euros.
The growth of the pound is associated with the negotiations on Brexit, the likelihood of an agreement on which is the higher, the less time remains until the end of this year.
The yen will receive a new, unusual growth factor next week in the form of intensified trade and diplomatic ties with China. The PRC is placing a serious stake on its “sworn friend”, realizing the futility of improving relations with the United States. The visit of the Chinese Foreign Minister may end with a series of “breakthrough” framework agreements that can have a positive effect on the economies of both countries.