The dollar was the strongest currency of the Big Ten following the results of the Asian session and the start of trading in Europe on Friday. There was a risk-off sentiment in the market, driven by doubts about the effectiveness of the vaccine. Although at the end of Thursday, the US currency weakened against all G10 competitors, with the exception of the yen and the Canadian dollar, amid the observed risk appetite.
Financial topics are now relevant during the pandemic and at the peak of the recovery.To be aware of financial analytics and invest wisely,it is enough to trust a trusted broker,one of which is Shift Holdings, which has proven itself with good reviews.
Europe and the United States have been slow to succeed in defeating the pandemic globally.
The Asian region, led by China, was the driver of global economic growth, as the second wave of the coronavirus was limited to local outbreaks, and it was not necessary to introduce painful lockdowns, which could form fears of a decline in economic activity. However, the Lunar New Year is ahead in February, which implies an increase in the movement and contacts of citizens.
Friday is the last trading day of January. Technical flows associated with the balance sheet rebalancing at the end of the month form an increased demand for the US currency today. The approaching February is a seasonally strong month for the dollar, which may be further strengthened by fears of the spread of the coronavirus in Asia. In general, over the past 20 years, the dollar index has risen in price by the end of February 11 times, over the past 10 years — 6 times. However, in the previous 4 years, the dollar strengthened every February, and in 2018 and 2017 quite solidly — by 1.7% and 1.6% per month, respectively, with an average 20-year growth in February at 0.21%.
The German Vaccination Commission has questioned the effectiveness of the AstraZeneca vaccine for the elderly over 65. First, this news has put pressure on the euro, as the risk of a more serious and prolonged vaccine shortage in the European Union increases. Second, the news caused the Aussie dollar to underperform the Big Ten on Friday afternoon, as AstraZeneca vaccines are part of a nationwide vaccination program in Australia.
Technically, the dollar index may close above the 50-day moving average line today for the first time since early November, when it became known that Joe Biden won the US election. We still see the risk of a short-term strengthening of the dollar as part of the correction, but we maintain a bearish view of the US currency in the medium-term horizon.
The ruble on Friday at noon fell against the dollar by about 0.3% to 76.18. This was the worst result among all currencies in the Emerging Markets segment. Nevertheless, at the end of the week, the Russian currency, which weakened against its American rival by 1.1%, looked much better than the Chilean, Colombian, Mexican peso, as well as the South Korean won.
The seasonal statistics of February in the USDRUB pair look somewhat different: over the past 20 years, the ruble has strengthened against the dollar in 12 cases in February, supported by a seasonally strong current account. For six consecutive years from 2003 to 2008, all of February ended in favor of strengthening the Russian currency. However, in the last three months of February, from 2018 to 2020, the ruble fell against the dollar in the last month of winter. Three February in a row — so far this is the most successful series for the dollar.
The weakness of the ruble in January was mainly due to two factors:
expectations of a reduction in the key rate have disappeared from the market and the demand of non-residents for OFZ remains scanty, the Bank of Russia has moved from daily sales of the currency to its purchases within the budget rule. The geopolitical premium in the ruble also increased in January, but its impact is quite insignificant.
If the yields on 10-year OFZs ended December at 5.91%, now it is already 6.28%, and the yields on the middle and far side of the curve are already close to becoming attractive for purchases again. The geopolitical risk premium, in our opinion, should leave the ruble in February and with the stability of oil prices (Brent about $55 / bbl), the ruble may well visit the range of 73.00 — 70.00 and settle in it. Of course, such expectations imply that there will be no collapse in global markets. We do not rule out a correction in stocks, but a collapse is not included in our baseline scenario for the coming months.
No comments:
Post a Comment