The dollar benefited from the flight of investors from risk
On Friday in the currency markets there is the presence of evasion from risks. Dollar developing bearish momentum in tandem with the yen and is trying to recover against European currencies. The Euro came under profit-taking after four days of climbing, and the fall of German yields only accelerated the process. Yesterday, the pair reached local highs at 1.1840 area where slipped today in district 1.1750, getting support near the 20-day moving average.
The us currency is feeling the recovery in demand due to the deleveraging of risk due to the negative atmosphere around the summit of “Big twenty”, which escalated after yesterday’s aggressive tweets trump and regular threats by the EU to make the symmetric trade measures.
In General, the potential strengthening of the dollar at this stage seems limited, as investors turned to prospects for narrowing the divergence of the courses of the monetary policy of Central Banks. So, after the signals from the ECB, which promised to set a timetable for us QE tapering, the revived Bank of England. In particular, the Deputy head of the British Central Bank indicated the need for further rate increases to combat high inflation. The pound has not yet reacted to these comments by continuing to fight for the mark of 1.34 in terms of avoidance of risks.
Earlier in the week, markets will digest the outcome of B7, then switch to the session of fed and the ECB on Wednesday and Thursday respectively. Thus, this week’s geopolitical passions will fade into the background and let the scene of monetary policy, which will set the tone not only currencies, but also stocks and bonds.
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