12.11.202012:36 Forex Analysis & Reviews: Growing political tension in the US will support the dollar

The scandal surrounding the Pfizer CEO, who sold a large stake in his company before making an announcement last Monday regarding the high efficiency of the vaccine created by his company in collaboration with BioNTech with a 90% success rate, probably shows that he either does not believe that a vaccine can really be so effective, or believes that its effectiveness will be significantly lower. In any case, this shows that investors still sharply react to the COVID-19 topic.

The confrontation between Mr. Biden, who has appointed himself the new 46th President of the United States, and Mr. Trump, who does not recognize this, is starting to manifest itself as an additional negativity for the positive market mood. It is already clear that the "constitutional crisis" is shown, which will negatively affect the demand for company shares and will support the US dollar as a safe haven currency. Incidentally, this picture is already being observed in the currency markets.

The dollar receives support in the wake of these events, which is clearly indicated by the dynamics of the ICE dollar index, which continues to recover from Monday's local low of 92.120 points. Moreover, it shows an increase of 0.10% to 93.123 points.

It is noteworthy that due to COVID-19 and political tension in America, investors are distracted from the published economic statistics, which market players simply stopped paying attention to, reasonably believing that the events around the confrontation between Trump and Biden, as well as COVID-19 are the most important. Nevertheless, we paid attention to the statistics coming out.

In view of this, Germany's consumer inflation data were published today, which fully maintains the previous dynamics. So in monthly terms, it grows by 0.1%, but it is still negative in annual terms, declining by 0.2%. Meanwhile, the UK GDP figures were worse than forecasted, as well as the industrial production figures, which will put pressure on the pound's rate.

For the US statistics, we will single out the publication of consumer inflation and the data on the number of initial applications for unemployment benefits for the last week.

On another note, Governor of the Bank of England A. Bailey, ECB's representative L. de Guindos and ECB's chief C. Lagarde are expected to make a speech today.

In general, we expect that the tension with the transfer of power in the US and the situation with COVID-19 will provide local support to the dollar.

Forecast of the day:

The AUD/USD pair is trading below 0.7265. A drop in demand for risky assets and, conversely, a rise in investor interest in the US dollar will exert local pressure on the pair. We believe that it will continue to decline to the level of 0.7180 after the reversal.

The USD/CAD pair is gaining support amid rising demand for the US dollar as a safe haven currency. We believe that this fact will push the pair up to the level of 1.3165.