The dollar slowed its progression on Thursday but nevertheless managed to nibble ground on most major currencies, a resurgence of inflation having supported American bond rates. Around 8:20 p.m. GMT, the greenback rose 0.36% against the single currency, to 1.0524 dollars per euro. Earlier, it had reached 1.0497 dollars, a first in thirteen months.
The Norwegian krone recorded a one-year low against the «greenback»one of the nicknames of the American currency, while the Indian rupee set a new record of weakness against the dollar. The Canadian dollar fell as it had not done in four and a half years. But the «buck» slowed the pace, after a week of levitation initiated by the election of Donald Trump as President of the United States.
Measured speech from the Fed
“The mood is one of consolidation today”commented Marc Chandler, of Bannockburn Global Forex, after the euro hit a more than one-year low against the dollar. “But we have not yet reached key thresholds”he warned. “We just take a break and reset.” For Marc Chandler, the United States currency remains supported by very favorable bond rate spreads with other major countries. They are due to the prospect of a second term for Donald Trump, which is expected to be inflationary, but also to the measured speech of the American central bank (Fed), in no hurry to cut its rates.
On Wednesday, the president of the Fed branch in Dallas, Lorie Logan, considered it necessary to demonstrate «prudence» in terms of monetary easing, to avoid a return of inflation. Investors noted the rebound in the CPI consumer price index in October compared to September, as well as a bad surprise on the PPI producer price index, which came out above expectations on Thursday. The yield on 2-year US government bonds rose to 4.35% compared to 4.28% the day before at closing. The market no longer rules out the hypothesis that the Fed would lower its key rate only twice by the end of 2025, whereas it was counting on five reductions just a month ago.
For Marc Chandler, the greenback will not relax its grip as long as rate differentials continue to widen. On Thursday, the difference between the 2-year American rate and its German equivalent reached a peak more frequented in almost two years (December 2022). For Adam Trunquist, of LPL, technical indicators “suggest” nevertheless “that the upward momentum (of the dollar) could lose strength”.
Swiss
