(CercleFinance.com) – What a descent for the Euro (up to -2.2% towards $1.685 then -1.9% to 1.0725 this evening) and the Yen (-2.1% towards 154.7 , the Japanese currency is at its lowest this evening).
The '$-Index' soared +1.8% towards 105.20, its best mark since July 4.
The 2 currencies which are resisting the best are the Pound with -1.1% and the Canadian Dollar with -0.9%, the Swiss Franc drops -1.5% towards 0.8750.
The overwhelming victory of Trump and the Republicans in Congress (they will be in the majority in both chambers) indirectly boosts the Dollar, via the surge in long-term rates which had already risen from +70 to +75Pts (unheard of during the start of a rate reduction cycle by the FED) and which add +20Pts more in 24 hours and +25Pts in 36 hours.
The US '30 years' rose by +22.5 points to 4.675% (4.652% this evening, or +20 points), the '10 years' by +21 points to 4.4860% (worst score since June 10 or on July 1) before falling back imperceptibly towards 4.478% (i.e. +19Pts).
It is difficult to imagine that the FED will reduce its key rate by -25 points tomorrow evening (8 p.m.), a scenario which nevertheless has consensus after the plunge in job creation in October and then in available 'job openings'.
Coming back to the political context, the triumph of the Republicans is total… and the media steamroller completely ruled out conceiving such a scenario.
Contrary to expectations inspired by 2016 (Trump obtains the largest number of electors but remains in the minority in votes), the popular vote resembles a tidal wave with 6 million votes in favor of the Republican Party.
And there, it's also a very big surprise: the Republican administration will benefit from control of both chambers of Congress… for at least 2 years, which gives Donald Trump carte blanche to roll out his tax relief measures. taxes and recovery measures, under the protection of increased customs duties against China, even Europe… without forgetting Mexico and even Canada.
The decline in the Euro is symmetrically fueled by fears of an aggressive US trade policy and geopolitical tensions, in particular due to foreseeable changes concerning the financing of NATO which would rely more on European contributions.
Given the current political situation, several macroeconomic data have been published in Europe, with relative indifference, notably the composite PMI indices for the month of October.
The HCOB PMI composite index of overall activity in France, calculated by S&P Global, fell from 48.6 in September to 48.1 in October, signaling the sharpest contraction in French private sector activity since last February.
The HCOB composite PMI index of overall activity in the euro zone stood at 50 in October, reflecting perfect stability in private sector activity, after having reflected a slight contraction by standing at 49, 6 the previous month.
Note that Gold succumbs this time to the surge in the dollar (and rates) with a relapse of -2.7% towards 2,660/2,665, the former zenith of last September 26.
Otherwise, expressed in Euro, the precious metal only gives up 0.7 to 0.8%.
