Investors may again show interest in dollars
Investors may again show interest in dollars The single currency of the start of trading this week is above the $ 1.20 mark, which is the highest level since the end of 2014. The trend of the decline of the US dollar to the euro and to the majority of the main competitors is roughly comparable to the rate of its growth since mid-2014. Thus, now we see a full-fledged turn. If the scale of the movement is also comparable, then by March the EURUSD pair will have to reach the 1.40 area, that is, add 20 more figures or 17%.
However, this development of events can hardly be considered normal. Historically, the growth waves of the US dollar are shorter and sharper than the subsequent return to previous levels. The reason lies in the fact that flight to the dollar is on fears, and its weakening is accompanied by a recovery in demand for risks. This is a longer and cautious process in the first stages: frightened investors initially require a certain time to restore the belief that the worst is over.
Having lost about 13% from peak levels of the year, the dollar index probably has exhausted its potential for further uninterrupted weakening. True, now that the process of weakening the dollar stopped, you need a good reason. Such an occasion did not become either data on inflation and the labor market in the US, nor the recent comments by Fed officials. Perhaps they will be the actions of the FOMC, but the next meeting is scheduled for September 20, and until this time the Fed will remain silent.
However, the dollar has hope for a hurricane. Restoration of the country will require the attraction of significant funds from both the state and private capital. Similar we saw in Japan, when the yen had to be restrained from growth after the earthquake and tsunami in two stages: interventions on the first market movement and policy mitigation during the year.
Still low rates in the US also made the dollar somewhat of a safe haven, with inherent side effects in the form of growth on news about disasters in the country. Therefore, it is very possible that in the coming weeks the dollar will be able to turn under the influence of the repatriation of capital to the country and large-scale programs of borrowing from the government.
Demand for dollars in the beginning of the week can surprise many, and from the pair EURUSD it is quite possible to expect the dive under the mark of 1.20 with possible targets near 1.180-1.185 or 1.0% -1.5% to the majority of assets. This will not mean a new wave of USD growth, but only a correction of the previous oversold.
The pair USDRUB in such conditions is able to stay above 57. Also, one can not exclude attempts to climb again above 58 on the weakening of oil. From EURRUB in this case, you can expect a failure under 68.50 and even attempts to break through 68 at the worst scenario for the euro and neutral for the ruble development scenario.