The acting protective asset, US dollar rises in price amid stocks decline. Bidding on Fridays looks mixed. The US securities market has returned to growth, despite concerns about the second wave of the spread of the coronavirus pandemic, and is preparing to complete the week with growth. At the same time, the greenback also retains the achievements in relation to a basket of key currencies received in recent days as a safe haven asset.
The dollar index is within the upward trend, both medium and long term. While it is trading above 97.4, you need to look only for impulses to buy.
On Friday, nothing significant is expected, including macroeconomic reports. However, highlighting retail sales in Canada, traders should pay attention to the dynamics of the interbank lending market, where a contradictory situation is observed.
It’s quiet in New York. At a repo auction on Thursday, US banks sent applications to the Central Bank for $ 1 billion. This is the smallest amount in the last month. For example, a week earlier applications on average reached $ 59.5 billion. Consequently, there are no problems with dollar liquidity.
A more interesting situation happened in London, where the Libor 3M benchmark rate approached a 3-day peak. Along with this, the annual rate is reduced. Although the problems with dollar liquidity are short-term, they still exist. It seems that some European banks urgently need dollars. We are talking about a small amount since the growth in rates is negligible. When bankers urgently need a large amount, then the rates increase accordingly, but this is not happening now. What does it mean? This means that a temporary jump in demand for dollars in London does not allow the euro to show growth this week. As soon as this process is completed, the euro will begin to storm the June highs. Now the downward trend dominates the pair.
Today, the EUR / USD currency pair increased the range of consolidation downward, heading to the level of 1.1180. Nevertheless, until the end of the trading day, the upward trend is expected to reach 1.1220, then further growth is possible to the round mark of 1.11.
EUR / USD
It is worth noting that on Friday the Federal Reserve should buy back assets worth $ 12.8 billion. This is the most serious amount of the outgoing week. On average, the Central Bank of the United States in recent days bought back $ 3 billion. Today’s volume is four times more, the stock market will like it.