The currency market remains extremely "boring" in the wake of the continuing influence of the likelihood of a second wave of coronavirus infection. In any case, this topic is exaggerated in the media and supported by active statements by WHO. These cautious moods in the investor environment are supported by the ongoing pandemic in the United States and the local outbreak of COVID -19, albeit small in quantitative terms, in China.
In general, watching everything that happens on world markets, we can say that bidders are balancing. On the one hand, they do not want to sell, and on the other, they do not want to buy, since the pros and cons factors approximately balance each other. It can be recalled that the fears of the probability of the second wave of the pandemic are negative, and the broad stimulus measures from global central banks and the understanding that the global economy will recover with some manifestations of coronavirus infection are difficult, slow, but steady, or this growth will be more vigorous starting from the third quarter, when it becomes clear that these fears were not justified.
Building a short-term forecast for the next three months, we believe that amid continued recovery in the global economy, the US dollar will begin to more actively lose ground. It seems that after reaching the maximum for the basket of major currencies on March 19, the ICE dollar index will only decline, characterizing the general attitude of market participants to buying risk, which clearly correlates with the dynamics of the US dollar.
After the June rally, the dollar made an attempt to recover, but it was not so strong and more like a small correction before the continuation of decline under the pressure of more positive economic data, which already began to signal the first problem of US economic recovery.
Philadelphia Federal Reserve Index data released on Monday unexpectedly showed a 2.61 point increase in May against a 16.74 point decline a month earlier, which was revised down to -17.89 point. And although the value of the indicator did not have a noticeable effect on the market, it has become another stumbling block supporting the hopes for a more vigorous restoration of the US economy, and with it the world economy.
Important from the point of view of the attitude of the American authorities to the prospects of the second wave of COVID-19 was the statement on the CNBC channel of economic adviser D. Trump, L. Kudlow, who said that there is no second wave of the COVID-19 epidemic in America, and only focal outbreaks of regions. What's even more important were his words that decisions on additional restrictive measures will be taken by regional authorities and that they are unlikely to be taken centrally.
Assessing the general situation in the markets, we believe that the period of uncertainty, characterized by high volatility in the markets, will continue this week.
Forecast of the day:
The EUR/USD pair is trading near the upper border of the short-term downward trend. It can continue to grow locally to the level of 1.1350 in the wake of the publication of positive data on the index of business activity in the manufacturing sector and the services sector in Germany and the eurozone, which will be released today.
The USD/JPY pair remains in the range 106.65-107.65. It turns up on a wave of words spoken by the White House trade adviser. P. Navarro, who said that trade relations between the US and China do not stop. The positive wave from this news may push the pair up to the level of 107.65.
