FX.co ★ Rising demand for shares puts pressure on the US dollar

The world stock markets ended the previous week in the positive zone due to strong corporate reporting and some improvement in business activity in the manufacturing and service sectors, which was signaled by Friday's economic statistics.

When negative trends have been observed recently in the economies of Britain, the Eurozone, Germany, and the United States, it seems that the situation has begun to slowly change for the better. It can be said that businesses are beginning to adapt to conditions of high inflation and expectations of reducing huge amounts of the Fed's liquidity, which may serve as a signal for other world central banks to begin similar processes – cutting the amount of financial assistance to national economies.

The growth in demand for company shares exerts the expected pressure on the US dollar and all this is happening on the wave of an increase in the yield of treasuries, which are supported in anticipation of not only the decision of the Federal Reserve to begin reducing asset purchases, but also an increase in interest rates in conditions of an unacceptable inflation rate of 5.4%.

Considering all that is happening, we believe that the growth of world stock indices during the corporate reporting period will continue, which will put pressure on the US dollar. In addition, reaching a compromise between Republicans and Democrats in Congress will lead to a decision to raise the level of public debt, which will also calm the markets and maintain a generally positive mood in the market.

Forecast of the day:

The price of WTI crude oil is trading above the level of 83.85. A consolidation above this level, as well as the continuing high demand for crude oil amid the beginning of winter and the world's high inflation, will support prices, which may rise to $ 87.35 per barrel.