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Forecasts of FRS members will set the trend for the dollar

DATE OF PUBLICATION: 2021-01-12 17: 53: 58 The history of the past shows that being an unshakable bear on the US dollar is expensive. Players should watch closely for possible reversals. These reasons have already come from the growth of Treasury yields. Recent events in the United States and the rise to power of the Democrats have led to higher yields. On Tuesday, growth in 10-year government bonds reached a 10-month high. This is unlikely to end there. Commerzbank admits a new round of higher yields. “There is still sufficient upside potential after the dollar depreciated by at least 10% against other major currencies in the past year,” – currency analysts write. the reluctance of the US Central Bank to increase QE. “If the fiscal support makes the Fed less inclined to a new easing of monetary policy, this will lead to a further rise in the dollar”, – added the strategists. Note that the President of the Federal Reserve Bank of Atlanta Rafael Bostic spoke about a possible reduction in bond purchases. It was not easy for US currency sellers to hear about the regulator’s readiness to cut purchases at the end of 2021. “Much will depend on the situation with the virus and vaccinations, but if everything goes well and we learn quickly, I think there will be good potential for the growth of the economy and the Central Bank will need to react to this, “Bostic said during a virtual speech. Today, five FOMC members are scheduled to speak. Financial officials should clarify the Fed’s view on the state of the market and further plans for QE. There is a possibility that they are likely to take a lukewarm response to Bostic’s comments and oppose any proposal for a reduction in monetary stimulus. Some strategists are confident that the dollar will continue to be bearish. Citigroup analysts write that they still adhere to the strategy of selling the American currency, as dollar assets look “expensive.” On Tuesday, the dollar index slowed growth after on Monday went above 90.6. Against the euro, the greenback remained at around 1.2150, while the pound recovered from yesterday’s fall and almost completely made up for lost time. However, the British currency is expected to experience difficulties in rallying until the Bank of England removes the idea of ​​negative interest rates from the agenda. Central Bank officials said on Monday that additional stimulus may be needed to support the economy. It is not yet clear whether the regulator will resort to such a step, but as long as there are rumors about negative rates in the UK, the pound will remain under pressure. Material provided by InstaForex – Source – InstaForex

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