2020-06-02 • Updated
Has the US dollar lost a top position forever?
According to Goldman Sachs strategists, now is the perfect time to go short on the US dollar. Perhaps, you’ve noticed it already as USD dropped against almost every currency. Investors prefer EUR and riskier currencies such as AUD, GBP and CAD.
The first reason is that economies are reopening outside the USA, while there are violent protests and looting in most American cities. The devastating situation increases chances of the second coronavirus wave and further loss of economic activity. It makes the further recovery more complicated. All those factors pushed the US dollar down. However, there is no way it will last forever. The US dollar will bring its positions back one day, but in short term it’s a good idea to consider selling USD.
Goldman Sachs analysts believe European currencies should be the most attractive for investors these days. Europe has really started coming back to normal life. There are steady reopening process and decreased rates of new coronavirus cases in Europe. Moreover, the ECB gives a great economical support to all the countries of Eurozone by its EU recovery fund with additional 750 billion euros.
For example, look at EUR/USD. It keeps rallying. The price approaches the resistance at 1.117. It has struggled to cross that level few times in March. If it manages to break through it, it will clear the way upward to 1.121. Support levels are 1.11 and 1.10.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
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.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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