30 sep
2019
9:44
Markets
The dollar is strengthening: what factors are affecting it?
Last week, the dollar strengthened, and, if the USA and China reach an agreement, and statistics do not disappoint, it will continue growing.

On Friday, S&P500 futures grew, and the ECB and the Fed already announced their main decisions. Most experts predict the growth of the dollar, all the more so as the countries involved in the trade conflict are achieving good results with the new agreements.
 
The US–China talks will take place on October 10–11. Both parties already noted that they are satisfied with the preliminary consultations. Trump stated that he hope to reach an agreement much earlier than initially expected. However, the outcome is still uncertain.
 
Macrostatistics data on US markets support the dollar as well. They are neutral with respect to the GDP but favorable for the real estate market and other parameters. The speeches of the key figures of the Fed, data on ISM for September, industrial orders volumes, import/export, trade balance, and unemployment are expected this week as well. However, according to analysts, they will not have a negative impact on the dollar.
 
Last week, oil prices returned to the level before the attack to the refineries in Saudi Arabia. Extraction volumes have virtually been restored. This reduces investment risks, taking into consideration the reduction of the rate by the Fed. New purchases of assets are expected.
 
There are still issues with dollar liquidity despite the fact that the Fed increased financing limits. The demand remains higher than the offer, thus leading to expectations of further increase of the Fed balance sheet.
 
Fairly good statistic data and liquidity shortage strengthen the American currency. The dollar index is currently at the maximum level for the past 1.5 years.