On Wednesday, the mood in global financial markets improved markedly. The main reason for this was the news from the drug developer of the American company Moderna Inc, which reported successful interim trials of the vaccine against COVID-19.
This news became the leading one and, together with optimistic economic statistics, supported the growth of a noticeable demand for risky assets. Shares of the company itself at the moment added more than 13%. The firm also said it will conduct more tests from July 27 on more volunteers. The overall success of this event will be a strong factor in increasing demand for company shares, as well as commodity and commodity assets, which together will lead to an outflow of funds from protective assets, including, of course, the US dollar.
It can be recalled that we previously believed that the monetary policy factor of the Fed together with the US Treasury as the issue regarding coronavirus pandemic weakened due to the invention of a vaccine against this infection. And now, if Moderna Inc really managed to find one - this will be a breakthrough that will lead to a large influx of yearning for profit investors in shares, significantly sagging earlier in the price of companies. On Wednesday, a change in market sentiment led to a marked increase in the yield on US government bonds. So at the moment, the benchmark yield of 10-year-old traders was at the level of 0.635%, adding more than 3% per day.
In this situation, the dollar, burdened by large-scale incentive measures, will have to give up their positions. And the farther this process is observed, the more it will decline on the wave of sales, which investors bought earlier as a safe haven currency. We are confident that the steady formation of such a trend, under the pressure of rising demand for the dollar already as a funding currency, which, incidentally, was noted in 2009 on the wave of the beginning of quantitative easing programs from the Federal Reserve, will lead to its weakening on the whole front. For example, the EU's agreement on the Recovery Fund's issue will only increase demand for the euro against the dollar, and an increase in demand for stocks of companies, combined with rising prices for crude oil, which will be necessary in the future due to the increased pace of recovery in the global economy,
In general, we continue to be optimistic about the global perspective of a steady depreciation of the US currency.
Forecast of the day:
The EUR/USD pair is consolidating below 1.1420. Any changes in the monetary policy of the ECB, which will be held today is not expected. But positive mood from the regulator regarding the recovery of the European economy, as well as hopes for an early production of vaccines from COVID-19, will push the pair to increase to 1.1500.
The USD/CAD pair still remains in the range of 1.3500-1.3665. Rising crude oil prices, news about the vaccine in the US, and possibly a positive result from the OPEC + meeting could be catalysts for lowering the pair. If it overcomes the lower border of the range, it will continue to decline to 1.3370.
