Despite the increase in the number of deaths and cases in the United States from coronavirus infection, which previously clearly supported the dollar as a safe haven currency, it still ended in the negative zone last week.
According to the dynamics of the ICE dollar index, the US currency finished under noticeable pressure, and this despite the fact that concerns have arisen this week due to increasing number of cases and deaths from COVID-19. This market behavior can be explained by previously published positive data on the American economy, which insistently pointed out to investors that it is continuing to recover. In addition, D. Trump and his economic adviser, L. Kudlow confirmed again that the country's economy will not be closed under the influence of the pressure of coronavirus infection.
In addition, an additional negative factor for the dollar was the growth of hopes that at the EU summit on July 18, a general agreement on the Recovery Fund would still be reached. Moreover, support for local stock markets was also provided by the news that the ECB could expand incentive measures once again by increasing asset purchases. This caused an increase in demand for risky assets in Europe and, as a result, the appreciation of the euro and, after it, the British pound sterling.
This week, the market will closely monitor the publication of important economic data, of which the most interesting will be: the final decision of the ECB, the Central Bank of Japan and the Central Bank of Canada on monetary policy, the value of GDP for the 2nd quarter of the UK and China, as well as consumer inflation in the eurozone, Germany, Britain and the United States and, of course, the values of production indicators in Britain, the eurozone and America.
The week will be filled with the publication of economic statistics and, if they generally show positive dynamics, this may already support the demand for risky assets in the wake of the beginning of the corporate reporting season for the second quarter and, as a result, pressure on the US currency, which will continue to smoothly decline.
Forecast of the day:
The GBP/USD pair remains in a short-term upward trend amid expectations of an improvement in the European economy, the weakness of the dollar and the approaching end of the Brexit issue. Breaking through the price of 1.2665 will push it higher to 1.2700.
The USD/CAD pair is consolidating in the range of 1.3500-1.3665. Pending OPEC + decision on measures to reduce crude oil production this week may push the pair to decline to the lower boundary of this range of 1.3500.
