Falling stock markets traditionally increase the demand for dollars. Big investors are now selling technology stocks ahead of the US elections, amid uncertain predictions about the next president. The gap between Trump and Biden has suddenly narrowed, and this is bringing instability to the markets.
The next – unpredictable factor of the coming week – the meeting of the European Central Bank. Judging by the statements of officials, the ECB is concerned about the strengthening of the dollar. His actions led to a reversal in the dollar index last week. The resulting correction may deepen if the head of the ECB Christine Lagarde hints at expanding programs to stimulate the economy.
The economic stimulus programs of France and Germany are capable of canceling the scenario of strengthening the dollar. Two years before the elections, Macron will try to neutralize the consequences of the coronavirus, pouring as much money as possible from the agreed 100 billion euros, state aid and investments. Germany has extended its employment subsidies until 2021.
Currency speculators will pay attention to these factors only if there are clear signs of a slowdown in the US economic recovery or a new round of American confrontation with China.