Equilibrium factors: how can the US dollar and euro change in autumn

By the beginning of the fall of 2019, the ruble is showing weakening. Moreover, in the summer, the national currency showed indefinite dynamics. If in July the US dollar and the euro fell below 63 rubles and 70 rubles, respectively, then in August the Russian currency experienced a serious drop - by almost 4.5%.

However, experts interviewed by RT suggested that in the fall, the depreciation of the ruble against US and European currencies will not be so significant.

Most analysts associate this forecast with the continuation of the policy of the Central Bank, the US Federal Reserve and the European Central Bank to reduce interest rates to revive the economy. So, already on September 6 there will be a meeting of the board of directors of the Russian Central Bank, September 12 - the ECB and September 18 - the US Federal Reserve.

“We expect two more reductions in the key rate of the Central Bank by the end of the year. In September, and most likely closer to December, which may put pressure on the ruble. On the other hand, similar actions are expected in the US, where the Fed in September with a probability of 100% will lower the rate. Another decrease may occur closer to the end of the year. Such a decision by the Fed’s top management will be a factor balancing currencies, ”said Denis Ikonnikov, portfolio manager of QBF, RT.

Experts point out that the Russian authorities are concerned about the relatively low inflation in the country. The Ministry of Economic Development lowered its forecast for consumer price growth for 2019 to 3.8% with the target of 4%. In a conversation with RT, the head of the analytical department of Veles Capital investment company Ivan Manaenko suggested that such a situation could “untie” the Central Bank’s hands in terms of further reducing the key rate.

“On the one hand, a decrease in the Central Bank rate will weaken the ruble somewhat. On the other hand, OFZ market will be supported, which should strengthen the domestic currency in the long term, ”the expert says.

In turn, the deputy head of the Alpari information and analytical center Natalya Milchakova added that the statement by the head of the US Federal Reserve Jerome Powell following the meeting of the federal agency may affect exchange rates. The interlocutor of RT explained that his speech will give investors a signal about the nature of the Fed’s measures - will they be temporary or will the cycle to mitigate monetary policy continue.

Milchakova also did not rule out that the European Central Bank may decide to stimulate the economy and lower the interest rate to a negative level.

“Lowering the ECB rate will negatively affect the euro. Therefore, the ruble will have a chance to grow against the European currency, ”the expert notes.

She also expects a wide interval of the euro this season - from 71 to 75 rubles precisely because of the unpredictability of the European currency. The expert predicted the dollar exchange rate in the corridor from 64 to 67 rubles.

The slowdown in global economic growth and the continuation of the trade confrontation between the United States and China are yet another pressure factor on world currencies, including the ruble.

“The trade war is in full swing, despite the so-called temporary ceasefire. The introduction of new tariffs casts doubt on the further prospects for normalizing relations between Washington and Beijing. In a negative scenario, this may provoke the withdrawal of investors from risky assets, ”said Ivan Manaenko.

On September 1, China introduced new higher tariffs on goods from the United States. Moreover, China devalued the yuan to a 12-year low. Donald Trump in response accused the country of currency manipulation and increased tariffs on Chinese imports from 10% to 15%.

Ivan Manaenko did not rule out that in autumn the euro will be traded at 73 rubles. At the same time, the expert allowed the ruble to strengthen to 69 against the euro. The analyst forecasts the fall of the dollar in the region of 65.5–67 rubles.

In addition, in the future, the price of oil will be affected by the price of oil, experts say.

“Perhaps oil prices will drop slightly in early September due to hurricanes that are traditional for this time of year. It is possible that the United States will set new production records, as large oil pipelines will be completed in this half-year and the country's export potential will improve significantly. In general, according to our forecasts, in the autumn the dollar will fluctuate in the range of 64–66 rubles, the euro - 71–73 rubles, ”concluded Denis Ikonnikov.