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Investors are still occupied with events and news that turned out to be plenty this year. This is headed by COVID-19, which affected the whole world, followed by vague prospects for the US presidency, as well as markets' reaction to the news about the successful trial of vaccines against COVID-19.
These events and news completely filled investors' minds, who simply ignored the incoming economic data as well as the worsening economic situation. The currency market has completely switched to speculative tracks, where the main role in making trading decisions is played by the events listed above.
At the same time, something dangerous for its participants, which fully reflects the uncertainty of the course of events was observed. The intraday movements of currency pairs have become limited recently and this clearly indicates that traders do not want to take risks and are just trying to take a small piece from the market and leave it.
On another note, there were clear guidelines earlier before the US presidential elections. However, this did not matter to investors, since whoever won the presidential race would announce additional measures to stimulate the US economy. But this did not happen, and so these expectations weakened the dollar and supported the demand for risky assets. It has now become clear that Mr. Trump will do everything to prevent Mr. Biden from entering the White House, which means that measures to support the economy should not be expected until the new year.
Uncertainty rises whether these measures will be taken or not. There are also a lot of other objective problems, which are expressed in the desire of the world Central Banks to weaken the rates of their currencies to maintain the competitiveness of their national producers in world markets and are actually eliminating fundamental reasons for buying some currencies against others.
Assessing the prospects for the development of events, we believe that the current condition will continue. Thus, high volatility in the market will dominate.
Forecast of the day:
The USD/CAD pair may continue to decline in the wake of the surge in crude oil prices, which continues amid a new major trade agreement between Asian countries. If the price falls below 1.3065, it will further decline to the level of 1.2995.
The USD/JPY pair is trading above the level of 104.50 again. If market mood deteriorates and the price drops below this level, further decline is likely to the level of 104.00.
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