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”.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Bearish scenario: Sales below 80.00 with TP1: 79.60... Anticipated bullish scenario: Intraday purchases above 80.70 with TP: 81.50...
Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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