The dollar accentuates its decline this Thursday, November 7, 2024, partially correcting its spectacular rise of almost 2% on Wednesday with the election of Donald Trump as President of the United States, and before a decision by the Federal Reserve (Fed).
Around 2:35 p.m. GMT (3:35 p.m. in Paris), the American currency lost 0.63% against the euro, to $1.0797.
It also fell by 0.80% against the pound, to $1.2983, after the decision of the Bank of England (BoE) to reduce its interest rates by 0.25 points.
Analysts expect an equivalent cut from the American central bank, the Fed, which also decides on its rates on Thursday.
For Commerzbank analyst Antje Praefcke, the result of the US presidential election “will not change anything in the Fed’s monetary policy in the short term”.
Faced with calmed inflation, “ the Fed can further lower its key rate in order to become less restrictive” and revive the economyhe explained.
Above all, the market partly corrects the crazy surge in the dollar on Wednesday, driven by the inflationary policies included in the Republican’s program, which fuels expectations of higher rates in the longer term in the United States.
Investors are now expecting a “rapid reaction from the European Central Bank (ECB)” to counter the fall of the euro and deal with new customs tariffs that the new American administration could put in place, underlines Ipek Ozkardeskaya, analyst at Swissquote.
The pound also rose by 0.17% against the single currency, to 83.16 pence per euro.
The BoE, unsurprisingly, lowered its key rate by a quarter of a point on Thursday, for the second time this year, to 4.75%, satisfied with the evolution of inflation. But she says she fears that the new British budget will increase pressure on prices in the medium term.
« Budget means Bank of England won’t cut rates as quickly or as significantly » than expected so far, estimates Paul Dales, analyst at Capital Economics.
The currencies of the Scandinavian countries also climb after announcements from their respective central banks on Thursday, at +1.88% against the dollar for the Norwegian crown and +1.29% for the Swedish.
In Sweden, the Riskbank lowered its key rate by 0.5% on Thursday to 2.25%. The currency is rising as the market expected the decline and data on Swedish inflation in October showed a stronger rise than expected.
The Norwegian central bank, for its part, kept its key rate unchanged on Thursday, at 4.50%, at the highest level in 16 years, and reiterated that it would keep it like this until the end of the year.
With AFP
