FINAM FOREX: US dollar renews lows


16 December 2020

Anna Zaitseva, analyst, FINAM Group

On Wednesday, December 16, the downward trend in the US currency continues. Thus, the DXY dollar index is down 0.04% and is near 90.382, while the EUR / USD rate adds 0.10% and is trading at 1.21611. A day earlier, the DXY index lost 0.35%, having updated the minimum for the last two and a half years, and the EUR / USD pair showed a close to zero change, however, it is holding near the maximum values ​​since April 2018.

The key factor contributing to the depreciation of the dollar remains a rather high appetite for risk in world markets in the hope of success in mass vaccination of the population in the largest countries. At the same time, by the end of this week, certification of a vaccine against Covid-19 produced by Moderna is expected. So, yesterday, the US Food and Drug Administration (FDA) confirmed that this drug, along with high efficacy, does not have serious side effects. The FDA will meet on Thursday to make a final decision on this vaccine.

In addition, the positive sentiment of market participants is associated with expectations of the imminent approval of a new stimulus package in the United States. Hopes for a positive outcome in the Republican-Democratic talks have increased after Republican Majority Leader in Congress Mitch McConnell said Congress would not end the year without agreeing to the bill.

In terms of macroeconomic statistics, yesterday in the United States came out data on industrial production: in November, the indicator rose by 0.4% (m / m) compared with an increase of 0.9% (m / m) a month earlier, exceeding the consensus forecast in + 0.3% (m / m). We can also note the publication of the December data on the index of business optimism IBD / TIPP. The indicator dropped by 1 percentage point to 49 points, which was the lowest value in the last three months.

The main event on Wednesday will be a press conference and the announcement of the Fed’s key rate following a two-day meeting. The Fed is likely to keep the current parameters of monetary policy unchanged, but the general assessment by the regulator of the current state of the American economy, its future prospects, and the need for additional measures of monetary stimulus will be of interest.

In addition, today you should pay attention to the publication of preliminary December data on PMIs in the manufacturing and services sectors in Germany, the Eurozone and the United States. Also in the eurozone will be released data on the trade balance and the volume of construction in October, and in the United States will become available data on retail sales and the volume of inventories.

EUR / USD quotes are consolidating near the level of the previous maximum, located at the level of 1.2174, upon breaking through which the upward movement may continue. In this scenario, the next target for the movement will be the level of 1.2500. Stochastic lines have moved to a favorable position for buying, however, they are near the overbought zone, which indicates a limited upside potential for the instrument in the short term.

This information is not investment advice.

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