Why the dollar is falling in 2019, and how much it will continue

  • And
  • +A

The beginning of the year the currency market was marked weakening of the U.S. dollar. The dollar index fell -1,19% drop began right from the beginning and increased after the comments of Jerome Powell, the fed, which it seems gave in to Trump and the market, and is ready to ease monetary policy. More precisely, to tighten it not so hard and straightforward, as we have seen before.
This year, according to forecasts of the fed the Central Bank expects only 2 round of promotions, and this is 2 times less than it was last year, but the constant contraction of liquidity, pursued by the fed under “quantitative tightening,” the current combination looked for the markets is very dangerous, what Powell repeatedly warned. If last year the fed Chairman was deaf to the pleas of the market, it seems that this year’s caution in raising rates will prevail, and that the short-term are already having a positive impact on the US market – the S&P500 rose by 11.26% to 2316 2586 points.
However, the current positive for the markets, maybe, just a break. Mark and 2629 2700 – the key resistance levels to overcome that S&P500 will be difficult, on the contrary, in my opinion, we will see the resumption of sales from these levels.
Globally nothing has changed, the trade war the US and China still dominates the minds of investors around the world. A report showing a slowdown in China, sent individual currency such as Australian dollar and British pound, knockdown, and although we are now seeing recovery, the situation demonstrates the extreme danger and high volatility in the holiday period a “thin market.”
Investor interest in the yen, a traditional asset-refuge, which at the time was strengthened to the level of 104 yen per dollar – a clear indicator of the flight from risk, as the growth of gold, which at the moment are adjusted to the levels of the highs at $1298 per Troy ounce, but at $1263 I expect the resumption of growth in prices for precious metals.
Against the Russian ruble, the dollar fell by 4.48% since the beginning of the year, but then the ruble will be seriously tested. The main risk for the ruble as last year, remain the sanctions issues.
Although today in connection with the “shutdown” of the Russian mass media spread the news that the U.S. Senate has blocked the adoption of anti-Russian sanctions, it should be understood that this is only a temporary reprieve, and it’s not in Russia, and in the internal problems of the government authorities of the United States, in connection with which the Democrats are currently refusing to vote for any initiative besides those aimed at the resumption of work of the government and early exit from the “shutdown”.
Gradually, political life in Washington aktiviziruyutsya, and with it new potential problems for Russia. Because current levels 66,99 rubles per dollar can be some of the nicest figures we will see in the coming months, as it already marks 66-66,20 likely resumption of US dollar growth against the ruble.
______________
Olga Prokhorova,
Expert
“The international financial centre