On Wednesday, the US dollar received support against virtually all major currencies in the wake of a sharp rise in the US stock market, which showed the strongest daily gain since 2009.
It is difficult to say what was the main reason for this, but, most likely, its upward dynamics was based on a strong previous oversold, which lasted a week and a half, on D. Trump's statement of confidence in Finance Minister S. Mnuchin, as well as on data on strong sales growth in the pre-Christmas season, which jumped 5.1% to more than $ 850 billion. Or maybe the mood of investors was influenced by Trump's call to buy shares in companies, which he did on Tuesday. It should also take into account the fact that a significant number of investors are now on weekends and the market is very "thin", which allows it to move sharply on small volumes.
The stimulus to the growth of the dollar also served as a noticeable increase in the yield of government bonds of the US Treasury, for example, the yield of the 10-year-term treasuries bench brand rose from 2.751% to 2.801%.
On the general wave of a positive and rising propensity for a risky game, prices for crude oil also jumped up.
Now the markets are wondering what to expect today and in the near future. In our opinion, the overall picture has not yet undergone any noticeable changes. The main negative conditions stimulating the resumption of sales still persist, the expectation of continuing to increase the Fed's interest rates, reducing its balance, a vague picture in the negotiation process between Beijing and Washington on mutual trade, as well as existing real grounds for slowing global growth.
In our opinion, if the market does not see any positive news today or does not want to invent them for itself, the fall in American stock indices will resume, which will become the basis for the resumption of negative trends in world markets.
With regard to the dynamics of the US dollar, then, in our opinion, it will not change radically. Not only negative factors but also positive factors that balance it in the foreign exchange market, continue to affect the dollar. Negatives include the resumption of the fall in the US equity market, the decline in the yield of Treasury government bonds, and internal political problems in America. The positive is the expectation of continuing the interest rate increase cycle, the process of reducing the balance of the Fed and the function of the currency of refuge.
Forecast of the day:
The USD / JPY currency pair is trading above 110.85. The resumption of negative trends in the market may push the pair below this mark and lead to its decline to 109.60.
The currency pair USD / CAD kept above the level of 1.3560. If crude oil prices continue to decline, the pair may rise to 1.3700.
The material has been provided by InstaForex Company - www.instaforex.com
