Activity in the currency markets fell markedly on the wave of investors' clear expectation of developments around the current situation with the gradual exit of countries from strict quarantine measures.

Markets' understanding that the global economy as a whole and the economies of a number of countries, starting with the United States, have suffered quite a lot against the background of the coronavirus pandemic has led to the fact that investor activity in the currency markets has significantly decreased. This behavior can be explained by the fact that the measures taken by the authorities and regulators in all economically significant countries have led to a significant weakening of the exchange rates of national currencies against the us dollar. At the same time, the US currency itself is under extreme pressure from the unprecedented stimulus measures taken by both the US Treasury Department and the Federal Reserve.

Last week, as we previously thought, ended for most major currency pairs where the dollar is present, without noticeable changes. Only two currency pairs underwent the only significant changes - the British pound/US dollar and the New Zealand dollar/US dollar. A noticeable decrease in these currency pairs can be explained by the greater weakness of the pound and the New Zealand dollar against the "American" currency. This is due to the fact that additional pressure on these currencies began to exert problems of a "local" nature.

The pound suddenly came under pressure again from Brexit's already forgotten topic, which receded into the background for some time in connection with the pandemic. Recent events have shown that the final compromise between the EU and the UK has not yet been found, which is causing the British currency to decline even in the face of a much weaker economic position of the dollar.

In turn, the somewhat more complex picture emerging around the US-China trade relations puts pressure on the Australian and New Zealand dollars. The latter, unlike the former, began to experience more noticeable problems amid a decline in exports of goods from New Zealand to China.

In general, the topic of resuming the tough confrontation between America and China will play a significant role this year. It will be good for the global economy if it ends after the election of the US President. So far, D. Trump has been actively using it in the political situation, trying to whitewash himself for his mistakes in a timely response to the start of the COVID-19 pandemic in America. Moving the topic of China's guilt for this pandemic will affect the mood of investors and force them to exercise noticeable caution in making investment decisions.

We expect that a noticeable change in the situation will occur only in the case of more noticeable positive changes around the coronavirus crisis. We believe that only closer to the fall of the US and European economies, and then the global economy as a whole, will begin to recover, thus reviving the financial markets.

Forecast of the day:

The GBP/USD pair may correct upwards to 1.2140. If this level holds, then the pair will decline again amid Brexit's topic and rush to the level of 1.2025.

The NZD/USD pair is also correcting upwards, which may lead to its local growth to 0.5970. Consolidating it below this level in the wake of the confrontation between the United States and China may lead to a decline again. In this case, it will resume to decline and fall to the level of 0.5840.