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Forex Traiding

USD drop has stopped, Santa Rally is in question

DATE OF PUBLICATION: 2020-12-25 19: 30: 09American stock indices ended Thursday trading higher, having met Christmas near record highs. However, it remains to be seen if the Santa Rally will take place. Some investors have already begun taking profits amid fears over a new strain of coronavirus and weak US economic performance. The surge in COVID-19 infections has negatively affected consumer confidence and retail sales in the country. In addition, the adoption of the next fiscal stimulus package has stalled in Washington, as US President Donald Trump refused to approve a bipartisan agreement, demanding larger payments for Americans. The Democrats sided with the head of the White House, supporting the idea of ​​increasing payments to most citizens to $ 2,000, but the Republicans took the At the moment, it is not clear how the situation will be resolved, but the longer the political games in Washington, the more likely a sell-off in the stock next week. Uncertainty over additional stimulus measures in the US supports the defensive greenback. Standing in Washington on Thursday, the USD traded in a narrow range and closed the day near 90.25, just slightly above the two and a half year low of 89.72 hit last week. Most experts recently polled by Reuters. believe that the dollar will continue to decline until at least mid-2021 as investors switch to riskier assets and seek higher yields. However, there are those who warn that rates against the US currency will not be a one-way street. ” Much will depend on whether there will be a quick and successful mass vaccination in the first quarter, and whether it will be followed by complacency (then the pressure on the dollar will be maximum), or everything will happen slowly and cautiously, “- said strategists at Saxo Bank.” Even if strong pressure on the USD continues in 2021, over time, other exporting countries (first Europe and then others) may drink in a competition to depreciate their currencies against the US dollar. Therefore, unless there is particularly high inflationary pressures or galloping economic optimism, the overall decline in the USD could be very uneven, “they added. While the UK and the EU managed to avoid parting without a trade deal, holiday sentiment in the markets was marred by a stalled economic package. stimulus in the US. The GBP / USD pair retreated from the previously reached local highs above 1.3600 and consolidated below 1.3550 after it became known that London and Brussels entered into a trade deal on Brexit, and the head of the European Commission Ursula von der Leyen and the main EU negotiator Barnier held a press conference. The restrained reaction of the British currency to this news is due to the fact that many aspects of future relations between the United Kingdom and the EU remain uncertain. “It is important to realize that this is only a basis for new trade relations, where to build something “, – said the specialists of National Austra lia Bank. “The deal is closed, but over time we will begin to see the economic impact of the UK’s exit from the EU. We believe that the pound will fall after all the positive aspects of the deal are played back, “said Sumitomo Mitsui Bank. According to the Bank of England, even after the conclusion of the trade deal, the negative impact of Brexit on the British economy in the first quarter of 2021 will be 1%. provided by InstaForex – Source – InstaForex

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