The US dollar is steadily strengthening against all currencies and even against the Japanese yen. The latter seems completely irrational against the background of the coronovirus raging in Asia. There is only one world currency that has grown against the US dollar in recent days. It’s the English pound. Naturally, against the EURO, the pound has grown much stronger.
Chart of the Day EUR/GBP
Is it really the new leader on the currency market? In fact, the pound rose against the dollar, as often happens, not because of the weakness of the U.S. dollar, but because of the “extreme weakness of the EURO”. The latest data on the European economy led to a large-scale flight of investors from EURO. Large funds try not to keep all the eggs in one basket. They have enough dollars.
So it makes sense to transfer money to another European currency. But in what currency? The Swiss franc? But the franc has a maximum negative swap. Then in fact, in Europe, there is no other applicant with huge liquidity, except for the pound sterling.
In addition, the idea that the island would be much easier to quarantine if the epidemic spreads to Europe begins to unfold. But it’s worth remembering the main thing. If this happens, the pound will still grow against the Euro, but will begin to fall against the American dollar, especially given the negative swap.
On Friday, oil grew for 4 consecutive days. The evil market keeps pulling the stops of speculators, who opened large positions with the leverage. This rebound is relatively small compared to a 20% decline since the beginning of this year. Fundamentally, however, nothing is changing. China is introducing more and more restrictive measures in its big cities, further reducing the demand for energy resources.
What’s waiting for us today?
00.50 Japan GDP data for Q4
05.30 Industrial production level in Japan for December
12.00 Speech by ECB representative Lane
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