According to the results of Monday, the American dollar was trading in different directions against the main currencies against the background of a number of important factors that determine the mood of market participants. These include rising expectations that, on a wave of signals about the beginning of a slowdown in US economic growth, as well as a large-scale trade war between the US and the PRC, which, although in a sluggish mode, is playing a significant role in slowing global growth, the Fed may halt the process of further raising interest rates. Another signal is the growing crisis in Europe, which is already vividly manifested in France in the form of protests of the population, which spread to Germany, the Netherlands and are ripening in other countries. In addition, the problem of the exit of Britain from the EU overshadows not only it, but also in general Europe.
The events that are currently observed in the world indicate that the influence of various negative factors may force investors to continue selling risky assets against the backdrop of waiting for the end of the ten-year economic cycle of global economic growth, which threatens to turn into a new recession or economic recession.
Considering such prospects, we believe that in the wake of increasing sales of risky assets, protective assets will be more and more in demand, government bonds of economically developed countries, primarily American treasuries, then the demand for gold will grow. From currencies, investors will acquire the Japanese yen, the Swiss franc, and the US dollar, which will be in demand not only as a safe haven currency but also a tool into which investors will leave the emerging markets. Also, supporting factor will be the continuation of the Fed's balance sheet reduction process, which, despite a possible pause in raising interest rates or even their termination, will turn into a "scarce" asset amid falling dollar supply in the world.
In this situation, undoubtedly, a probable drop in commodity currencies should be expected, since the decision of OPEC + to reduce the volume of crude oil production is unlikely to stimulate its growth due to the likely drop in demand for "black gold" due to the start of a new recession. Commodity currencies will also fall under the influence of a reduction in world trade due to the prospects for a new economic downturn amid trade wars that the US will not stop. The euro and sterling are most likely to be victims of Brexit in the wake of the economic downturn in Europe, which will cause an increase in social tensions.
Given such possible prospects, we believe that in the medium term, the dollar will remain at least stable against major currencies or even grow.
Forecast of the day:
Gold continues to receive support in the wake of the prospects of a new economic downturn. From a technical point of view, a price increase above the level of 1247.35 may stimulate a price increase to 1259.00.
The GBP / USD currency pair is below 1.2615 amid Brexit's problems and T. May's postponing of parliamentary voting on this topic. The persistence of tension, as well as the inability of the couple to grow above this mark, may lead to a continuation of the price decline to 1.2365.
