The dollar index. Ruble's exchange rate.
Fed Chairman Janet Yellen said on Friday at the annual symposium of economists and representatives of the central banks of the world in Jackson Hole that the banking system, following the Fed's monetary policy after the crisis, has become more stable and safe, and the economy is more stable.
World stock markets following Yellen's speech showed a slight increase, and the dollar index fell sharply going towards the minimum values this year, and of course against this background, yields on American Treasuries continued to fall.
As a result, the whole essence of Janet Yellen's speech is that the curtailment of any regulatory functions of the Fed should be extremely moderate in order to maintain a positive effect for the entire financial system, and therefore in this situation the balance of the Fed does not expect a sharp reduction, and thus, the world's markets should continue to have sufficient liquidity.
Turning to the practical aspects of the speech, a reasonable question arises: how to properly place the accents and draw the right conclusions, and most importantly, understand how to use these findings in trading practice.
Most likely, against this background, the growth of risky assets will continue throughout the world, and for the commodity market such a policy of the Fed will become an additional stimulus for the growth of prices. The dollar index will continue its decline, but not as rapidly as it was since the beginning of the year. Do not expect the sheer fall of the index. Most likely, we are waiting for a smooth decline with strong corrections. For the currency pair EUR / USD, you should expect the breakthrough of the mark at 1.20.
Ironically, the beneficiary of this situation may well be the Russian ruble and here is why ...
The price of oil, if it does not continue its rapid movement towards higher levels, will at least stay at its current levels, still trying to reach the local maximums, which will positively affect the inflow of petrodollars. Of course, against this background, no one will sell Russian debt bonds and will be in a hurry to exchange the proceeds of rubles into dollars.
Demand for Russian bonds will continue, which in turn will support the ruble.
It is also worth paying attention to another important fact. The Chinese stock index continues its growth and came close to annual highs while remaining significantly below its historical highs. Such dynamics indicate that interest in global risk assets remains at a high level. Consequently, it is logical to expect the emergence of demand for Russian stock assets, and the continuation of demand for debt assets. The influx of fresh money, including foreign capital, will also contribute to strengthening the ruble exchange rate. It is likely that we will soon see the most expensive ruble this year, and then the price of 56-57 rubles per US dollar will be a good reason to exchange free rubles for US dollars.
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