The super dollar is strengthening against other currencies, driven by the ECB’s caution, solid economic data in the US and expectations about the US political future.
He global dollar is heading for its third consecutive weekly increase, benefiting from a cautious approach from the European Central Bank and strong economic data from the United States. These elements are expanding expectations about how quickly interest rates could fall, especially if Republican Donald Trump returns to the White House.
On the other hand, a series of economic data from China, including third quarter growth figures, is receiving a muted response from the markets. However, comments from the Chinese central bank providing more details on Beijing’s stimulus measures help lift Chinese assets overall.
Newly released data shows U.S. consumer spending exceeding expectations last month, reinforcing belief among investors that U.S. rates may not fall as quickly as thought a few weeks ago.
Dollar in the world: the background
On Thursday, the European Central Bank cuts euro zone rates by a quarter point, as expected, reflecting deteriorating economic growth in the region. As a result, the euro, which has been at its lowest since early August, is heading for its biggest three-week decline against the dollar since 2022, down close to 3%. Currently, the euro is up 0.1%, reaching $1.08378, after falling in 14 of the last 16 sessions.
The strengthening dollar is supported by growing bets on a possible Trump victory in November’s presidential election. YesHis tariff and tax policy proposals are seen as likely to keep rates high in the United States.
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Fiona Cincotta, from City Index, mentions that “there is a possibility that the euro will continue to fall. The ECB has cut rates and has given no hint of cuts in December. However, given the current state of inflation and the deteriorating economic outlook, they are focusing on propping up the economy a little more. “I see potential for a future decline of the euro towards the $1.08 level.”
The dollar fell 0.2% against the yen, trading at 149.925 units, after having surpassed the 150 level this week for the first time since early August. In contrast, sterling rose 0.2% to $1.3037, boosted by data indicating British retail sales grew more than expected in September.
Source: Ambito
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