More speculators are betting the dollar’s value will fall and the euro’s will rise than at any time before, according to the Commodity Futures Trading Commission. Positive bets on the euro have reached a record high.
The euro’s continuing rally prompted JPMorgan Chase analysts on 21 August to raise their year-end forecast for the euro’s value from $1.13 to $1.20.
The euro is already trading at a two-year high against the dollar.
The euro’s rally is based largely on speculators’ belief that Europe will emerge from its economic shutdown faster, and economies recover more quickly, than the U.S, analysts say. We disagree, however, as evidenced by new figures showing Europe’s recovery to be slowing.
Russia now takes in more euros than dollars in its trade with China, the euro’s share rising from 0.3 percent at the beginning of 2014 to 51 percent at the end of this year’s first quarter.
For its’ exports to Europe, Russia received 43 percent of its payments in euros during this year’s first three months, compared to 38 percent at the end of 2019.
TRENDPOST: As noted in last week’s Trends Journal, Russia and China have given each other direct access to each other’s currency, bypassing the need to spend dollars on the open market to buy rubles and renminbi.
The dollar is weakened, in part, by the U.S. Federal Reserve flooding the world with digital greenbacks at a time when the U.S. government is borrowing trillions to fight the COVID War.
And, the greater the movement grows to replace the U.S. dollar as a reserve currency, the higher gold prices will rise.
China, India, Turkey, and Russia lead a list of nations which have been buying gold at a pace that made 2018 a record year for governments’ purchase of the metal, and 2019 placed second.
