As a result of the last week, the US dollar has noticeably decreased against the basket of major currencies. There are several reasons for this.
In our opinion, there are two main reasons for the depreciation of the US currency. The first is the growth of hopes that at the Big 20 summit, the American president will be able to offer the Chinese prime minister such a new sales proposition, which will be difficult for him to refuse. There is a strong view of the market that Washington and Beijing can agree that they will eliminate the main reason for the slowdown in global economic growth. Against this background, a good support for the currency of Australia and New Zealand has been received.The second reason for the weakening of the dollar is the persistence of tensions in domestic policy in the United States, following the mid-term parliamentary elections, which retained the status quo of an uncompromising attitude of the parties, and these are Democrats and Republicans, towards each other. The upper house of the local parliament was left for representatives of the Republican Party, and the Democrats received the majority at the bottom. The factor of uncertainty and tension had a noticeable pressure on the rate of the American currency.And one more reason, which, in our opinion, could be the basis for such dynamics, is the banal profit-taking after a noticeable strengthening of the dollar in the currency markets.Evaluating everything that happens, the question arises, will this trend continue in the near foreseeable future or not? In our opinion, if an agreement is reached between the Americans and the Chinese on trade duties and other conditions of mutual trade, this will be a strong stimulating factor for the strengthening of commodity and commodity exchange rates. Here, you can count on the upward dynamics of the Australian, Canadian, and New Zealand dollars. The single currency may also grow in the wake of the demand for risky assets, the quotes of "black gold" may also receive support against the background of decreasing fears of slowing global growth. The unsuccessful negotiations between the UK and the EU on Brexit can collapse the sterling rate to the minimum values of 2016.But, despite the positive potential, everything can change dramatically if the Big 20 summit in Buenos Aires is not reached by agreement between the United States and China, and the Fed decisively raises interest rates at the December meeting of the regulator.Forecast of the day:The currency pair EUR / USD is trading above the level of 1.1375. The pair may adjust down to this mark on a wave of profit taking, but if it stays above it, there is a chance that local growth will continue to 1.1450-55.The currency pair AUD / USD is trading above the level of 0.7300. It is supported by the hope of reaching a trade compromise between the United States and China. If the pair holds above this level, there is a possibility of continuing its increase to 0.7360.
The material has been provided by InstaForex Company - www.instaforex.com