June 29 – July 3, 2020. Quarantine is good for the dollar

2020-06-27

The number of cases of coronavirus in the world is again approaching maximum levels. This may lead to a repetition of quarantine measures by a number of developed countries, which will slow down the recovery of the global economy. Therefore, the new work week starts against the backdrop of negative expectations of investors.

Demand for safe assets will increase political tensions: a possible fall in Hong Kong’s law enforcement system, a war of sanctions by the United States and the EU. Capital flows will go not only to gold, but also Fed bonds, which will ensure the growth of the dollar.

Currency speculators are likely to join investors, also buying American currency. Unlike other central banks, the Fed temporarily turned off the printing press. The agency lowers its balance sheet for the second week in a row, significantly reducing swap lines with developed countries.

An alternative that could lead to an increase in major currencies will be the resumption of active speculation in the stock markets. The reporting season for companies is starting next week, which could lead to a new wave of purchases if corporate, financial indicators exceed the values ​​of the first quarter.