ONLINE FOREX BROKER
2020-12-21 • Updated
The year-end is getting closer. What will 2021 bring us? Let’s find out what major banks expect!
Most analysts predict the further falling of the US dollar during the next year. The consensus is the decline by 5-10% against most currencies. There are two main reasons for this. First, US officials flooded the market with the USD via support measures to stimulate the economy. As a result, these actions will continue putting downward pressure on the dollar. Second, the Fed pledged to keep rates on the record lows for a couple of years. Therefore, investors won’t favor the low-yielding greenback.
China was the first country that experienced the Covid-19 pandemic and the first that got out of it. Therefore, China’s economy will grow at the fastest pace in comparison with other countries. Elsewhere, Biden’s presidency implies a more tepid US-China relationship, which will improve their trade negotiations. Therefore, the Chinese yuan may surge in 2021.
According to the ING Group, “market liberalization measures should allow USD/CNY to reach 6.30”. Notice that the CNY is traded within Mainland China only, while the CNH is traded outside of Mainland China. Since they have relatively small differences, we can expect the increase of the CNH in 2021 and therefore the fall of USD/CNH to the level around 6.30.
The ECB isn’t satisfied with the appreciated euro as it weighs on exports. However, the weak dollar trend has to outweigh any ECB’s attempts to lower the euro and push EUR/USD further up. The ING Group forecasts 1.25, Nordea Bank – 1.26, whereas CIBC disagrees and anticipates EUR/USD will reach 1.18 in 2021.
2021 will be the year of recovery and economic growth. Therefore, analysts expect a strong appetite for emerging markets currencies such as the South African rand. Developing countries tend to have higher interest rates and as a result, investors will favor these currencies for higher yields. The ZAR will attract capital inflows in 2021.
The post-Brexit period will weigh on the UK’s businesses because of higher taxes and the new EU-UK trade conditions. Moreover, the devastating effect of the Covid-19 pandemic will add headwinds to the British economy as well. Therefore, the Bank of England will have no other choice but to ease policy further, which will weigh on the pound.
Barclays forecasts Brent oil (BRN) will reach $53 per barrel in 2021 and US West Texas Intermediate (WTI) crude – $50 per barrel. According to them, the vaccine rollout will boost economic activity and rise the demand for crude oil.
Although gold is moving in a downtrend these days, Societe Generale expects the gold price to hit $2 300 in the first half of 2021. The bank based its forecasts on the low-interest rates around the world, and the weak US dollar, which will support gold prices during the first 6 months of the next year. However, Societe Generale anticipates gold will drop in the second half of 2021.
To sum up, analysts from Societe Generale expressed the main Forex tendencies for 2021 in one sentence: “Negative real rates, record levels of negative-yielding assets, expanding US debt, a strengthening CNY and, eventually, potential flows into EM assets will pressure the US dollar and be supportive for gold”.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
China's economy is rocketing. On the other hand OPEC+ countries take the decision to cut the production. What will be the impact on the oil price?
Are you aware of the recent crackdown by the SEC on major cryptocurrency exchanges, Binance US and Coinbase? Surprisingly, savvy Bitcoin traders seem unfazed, as options-based implied volatility metrics indicate. It appears that the lawsuits were anticipated and already factored into the market. Implied volatility reflects investors' expectations of price turbulence, but little evidence of heightened concern exists.
Let's dive into the recent debt ceiling saga in the US and its implications for the economy, deficit, and inflation. The good news is that a new debt deal is on the horizon, saving us from a potential default on June 5. Phew! This deal will impact the economy by providing stability and avoiding a financial catastrophe.
Get ready for some suspense as the Bank of Canada faces a tough decision on whether to raise interest rates or keep them on hold. The resilient Canadian economy and the goal of curbing inflation further are at the heart of this dilemma. While some money markets and economists predict another rate hike, others believe the central bank should exercise caution and wait, hinting at a possible increase later in the summer.
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