On Wednesday, the US dollar continued a gradual decline against commodity and commodity currencies, as well as the currencies of emerging economies: Russia, Turkey, India, and South Africa.
In our opinion, the main reason for this dynamic is the reduction in the tension in the trade war between the United States and China, which, truth be told, has not disappeared anywhere, as well as fixing profits on the previously open long position on the dollar before the Fed decision on monetary policy, which will It is known already on the following Wednesday following the results of the two-day meeting. And the positive moods were inspired by the decision of D. Trump to raise customs duties on imported products from China, amounting to $ 200 billion, while only 10%, rather than 25%, as previously thought. And although they will operate only until the end of this year, and then, if the US-sponsored trade agreement is not reached, they are expected to increase to 25%, the markets are now inspired, which has weakened the US dollar as a safe haven and increased demand for risky assets.
So, is it worth hoping that the dollar will continue to decline relative to major currencies?
In our opinion, it's weakening still has a local character. The fact that the Fed will raise interest rates next week for the next 0.25%, no one doubts. This probability, according to the dynamics of futures on the rates for Federal funds, is estimated at 94.4%. We believe that, despite the local positive, by the end of the week, the dollar's decline will stop and it will start buying already. Keeping in mind exactly the factor of raising interest rates in the US, which will be positively evaluated by investors against the backdrop of the actions of other world central banks. In any case, they clearly are not in a hurry to resume the process of raising interest rates. And first of all, this is precisely because of the trade conflict between Beijing and Washington, which is still very far from the solution.
Forecast of the day:
The currency pair USD / CAD is trading above the level of 1.2900. It still has the potential to continue to decline, if oil prices also overcome local highs, and optimism in the market will continue. Against this background, there is a probability of falling to 1.2800-10 after crossing the mark of 1.2900. But if this does not happen on the wave of risk appetite reduction, then it can turn up and rush to 1.2985.
The currency pair NZD / USD is trading above the level of 0.6630 against the backdrop of strong data from New Zealand's GDP. The pair has the potential to grow to 0.6700, but for this, it should hold above the level of 0.6630.
