The US dollar had lost ground in the previous session as traders closed profitable bets on a Trump presidency following his election victory. “We need more clarity on US policies,” said Athanasios Vamvakidis, global head of foreign exchange strategy at Bank of America (BofA). “Until then, the dollar will be governed by data and expectations about the path of Fed easing“he added, arguing that tariffs and tax cuts could be positive for the currency in the short term, but harmful in the long term.
The dollar index, which compares the currency with six other competitors, fell 0.05% this Friday to 104.37, on track to gain around 0.07% during the week, Reuters reported.
The way in which the authorities in China stimulating a struggling economy has been a key focus in recent months for antipodean currencies and also for the eurosince the bloc’s economy depends quite a bit on Chinese demand.
He chinese yuan marketed abroad weakened slightly after Beijing unveiled a 10 trillion yuan ($1.4 trillion) debt package on Friday to ease local governments’ financial strains and stabilize the economy. weakened economic growth.
China’s growth prospects also affect the global risk sentimentbut the market reaction was moderate. He offshore yuan It fell 0.35% and stood at 7.1737 per dollar. Before the press conference of Standing Committee of the National People’s Congresswas at 7,189.
The euro was down 0.1% at $1.0792 and was on track for a 0.4% decline during the week, which saw the collapse of the coalition government. Germany on Wednesday.
George Saravelos, head of currency research at Deutsche Banksaid that German political instability could be positive for the European single currency in the long term, but that it was too early to discount it. “The impact would come through the potential confidence gains that a more stable government would bring and, more importantly, the direct economic effects of a potentially more proactive fiscal stance,” he said.
German opposition parties and business groups are putting pressure on the chancellor Olaf Scholz to quickly call new elections to minimize political uncertainty.
The Federal Reserve on Thursday cut interest rates by 25 basis points, as widely expected, and signaled it will take a patient and cautious approach to further easing.
Traders have reacted to the outcome of Trump’s victory by trimming bets on rate cuts next year, as the duty feed the inflation.
Meanwhile, the yen rose 0.4% to 152.28 per dollar. “The yen-dollar exchange will be affected by US data and the Federal Reserve,” BofA’s Vamvakidis said. “It won’t be as affected by risk sentiment.”
Source: Ambito
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