Meeting in Jackson Hole: collusion against the dollar?
Meeting in Jackson Hole: collusion against the dollar? Speeches by both Yellen and Draghi on Friday alternately pushed the growth of the euro against, due to the background of their absence. Yellen said nothing about monetary policy, and this created an initial impulse for the EURUSD pair. Within an hour, she climbed 80 points, starting from the area around 1.18.
In his speech, Draghi did not mention the negative aspects of the sharp growth of the single currency this year on speculation around the QE’s soon-winding.
Today at the beginning of trading in Asia the pair EURUSD rose to 1.1950, which is a new 2.5-year high, updating the peak values of the beginning of August. The index of the dollar on forex rewrote its local lows, dropping to 92.30. With the exception of a short-term failure in May 2016, the dollar has not been so low since January 2015.
Apparently, the world’s leading central bankers do not see anything extraordinary in the current foreign exchange market to force them to intervene and give comments that can change the situation. This means that quite in line with historical norms, the US dollar may well continue its weakening, which most intensively (about 20%) occurs in the first year of the global trend reversal. In our case, this means the possibility of EURUSD growth to 1.24-1.25 in the first quarter of next year from the lows at 1.0340, set in January 2017.
For the global economy and global markets, such dynamics will be very favorable. The weakness of the dollar helps the commodity assets, as well as the overall demand for risks.
The ruble on Friday decidedly took the 59 mark for the dollar, the USDRUB pair finished the trades at the level of 58.57. Bulls in the pair are defeated, and Friday’s dynamics may well become the development of the pair’s downward trend in August. A very ambitious goal of this decline could be the area of April-June lows, when levels were reached near 56. Oil and ruble are helped by a tropical storm in the United States.
Seasonal factors will play against the ruble in October-December: usually at the end of the year the ruble falls by a couple or three percent, but does not grow.
Paradoxically, now bulls on the ruble should rely more on external factors that can develop the growth of the Russian currency to the dollar. Growth to the euro will be much more difficult, even if the dove of Draghi sees nothing wrong with the sharp strengthening of the single currency.