FX.co ★ US dollar rises again

Today, on Monday, the US dollar exchange rate is showing positive dynamics and is growing against other major currencies.

The rising number of new coronavirus cases in the world and doubts about the adoption of new measures to support the US economy contribute to the advance in the US dollar and other safe-haven assets.

This week, traders will be focused on the meetings of the European Central Bank and the Bank of Japan, as well as on the US GDP data for the third quarter.

The US Congress is ready to adopt a new stimulus package worth $2 trillion this week, but it is unknown whether the Senate will approve it, said the Speaker of the US House of Representatives Nancy Pelosi. She also claims that Congress wants to accept the package as soon as possible and is ready to make concessions.

The EUR/USD pair fell by 0.21% to trade at $1.1835. The USD/JPY pair increased by 0.15% to settle at 104.87. The euro dropped against the yen by 0.06% to 124.11.

The pound sterling lost 0.10% against the US dollar to trade at $1.3026.

The Australian dollar slid by 0.35% against the US Dollar to settle at $0.7114

The ICE Index, which measures the dynamics of the US dollar against six major currencies, gained 0.2% on Monday. The broader WSJ Dollar Index also inched up by 0.2%.

However, experts from Goldman Sachs believe that the USD growth will be short-lived. At the end of 2020, the US dollar may face serious problems. According to experts, after the presidential elections in the United States, the American currency is likely to slump.

Since the beginning of the pandemic, the federal government has invested about $3 trillion in the US economy, despite economists' numerous warnings of a harmful effect of such policies. The unprecedented printing of banknotes continues. Unsecured cash is slowly killing the US dollar. The Fed's minimum rates led to a loss of investors' interest in the US dollar. As a result, returns on investments in the American dollar assets fell.

Bank analysts argue that if Biden wins, the US dollar will collapse to two-year lows. In their opinion, the greenback could strengthen if Trump wins and people are successfully vaccinated against the coronavirus. The vaccine development is in full swing. Pfizer pharma company is expecting the "final results" of the third phase of vaccine trials by the end of October, and Moderna, in turn, in November.

However, Democrats have already promised a new economic stimulus package at the beginning of the next year. It is about $2.5 trillion. This will have a beneficial effect on the stock market. However, the US dollar will be under pressure.

The United States budget deficit has already reached $3 trillion. Besides, it will soon reach the level logged in 1945 that is 16% of GDP, according to the forecasts provided by the Congressional Budget Office. This jump was caused by the huge government spending on the fight against the coronavirus epidemic and its economic consequences.

The largest banks have suggested that a four trillion deficit is real. The Federal Reserve prints unsecured dollars and gives them away without receiving any valuable assets.

Since January, the US national debt has advanced from 108% to 123% of GDP and continues growing. In 2006, on the eve of the financial crisis, there were no more than 63%, as analysts from the Institute of International Finance note.

Goldman Sachs experts advise investors to get rid of their investments in the US dollars as soon as possible and take a closer look at the euro. This currency is more resistant to political risks.

Leading hedge funds are also expecting the euro to increase to $1.25 amid the US elections. The Democratic victory does not bode well for the greenback, as strategists at London-based MUFG Bank confirm. The Japanese bank holding company Mizuho believes that the status of the main currency in the world will eventually pass to the euro.

The US dollar is now the most overvalued currency in the world. Previously, it was irreplaceable. Now, there are plenty of alternatives, for example, a more stable euro, cryptocurrencies, gold and the Chinese yuan. All of these instruments seem to be more reliable for savings, which undermines the exorbitant privileges of the American currency.