The main focus of this week will look at Wednesday’s FOMC meeting at 7 pm UK Time.
US Dollar Analysis
The US dollar will continue to weaken over the coming months as global economic recovery occurs across many advanced economies.
The dollar was in high demand and strengthened through February to May as the stock market started to fall in late January because investors were selling international stocks due to the lockdown measures to curb the spread of the virus.
As investors sold international stocks, they exchanged international currencies into US dollars to buy US government Treasury bonds as a safe place to invest. The buying of US Government Treasury bonds caused the US Dollar to strengthen as global stock markets plunged lower.
However, since governments worldwide have eased restrictions and people have started to go back to work, investors are confident that the stock markets around the world will stage a sharp recovery as business returns to normal.
The easing of restrictions has meant that investors have started to sell off their US Treasury bond holdings to sell their US dollars in exchange to buy international currencies to go back into the global stock markets, causing the dollar to weaken as a result.
Simultaneously, the US Dollars’ attractiveness as an investment currency has waned as interest rates in the US hit 0.00%. All in all, this paints a weaker US Dollar picture.
Oil prices continue to climb as OPEC increases output cuts to rebalance the markets alongside increasing oil demand as global economies ease the lockdown measures.
We can expect oil prices to continue to push higher as over the coming months as Oil demand increases
$70.00 per barrel is a good target.
The Russian Ruble continues to strengthen against the US dollar as higher oil prices increase the commodity-linked Russian Ruble demand.
As oil prices continue to rise, this will be a good selling opportunity for the coming months.
Downside target $62.00