The US dollar continues to be under pressure in the wake of not only improved investor sentiment because of hopes that the Fed could pause this year in raising interest rates in the first half of this year, but also a new likelihood of the US government stopping on February 16, if D. Trump will not receive the necessary funds to build a barrier wall between the States and Mexico.
The end of "shutdown" or the suspension of the work of the government could not support the rate of the American currency due to the new likelihood of a growing conflict between Trump and his political opponents within America.
At the same time, there is noticeable support for high-yielding and commodity currencies. Australian and New Zealand dollars are rising against the "American" thanks to the expectation of a positive trade deal between China and the United States, which will have to be negotiated from January 30-31. They are also supported by the expectations that Beijing's decision to actually start a quantitative easing program to support national producers will positively affect the trade turnover between the PRC, on the one hand, and Australia and New Zealand, on the other. The Canadian dollar may also open up prospects for local growth in the wake of positive news from the customs duties deal between Beijing and Washington.
Another very important aspect is the strong signal from the ECB, the second largest after the Fed, of the world Central Bank, that it is unlikely to raise interest rates this year against the background of a clear slowdown in the European economy. All of this is a clear signal to the markets that we should expect the preservation of still low-interest rates from the Fed and the ECB, as well as a large-scale program to support the Chinese economy. In our opinion, all this can stimulate demand for risky assets at least in the short term, and the US dollar will remain under pressure.
Forecast of the day:
The currency pair AUD / USD gets support in the wake of hopes for a positive agreement on trade between China and the United States, as well as the expansion of China's stimulus measures. Given this, we can assume that if the pair consolidates above the level of 0.7200, then it can continue to rise to 0.7250.
The currency pair NZD / USD is trading above the level of 0.6845. It may continue to rise to 0.6900 on the wave of the same factors as AUD / USD.
