The dollar fell on Monday after having climbed sharply over the last two weeks, taking a break at the start of a week poor in catalysts, while remaining solid on its supports. Around 7:40 p.m. GMT, the American currency dropped 0.48% against the single currency, to 1.0591 dollars per euro. The Dollar Index, which compares the greenback to a basket of six currencies, lost 0.42%, to 106.233. On Friday, it reached 106.687, a closing high in more than a year.
This withdrawal of «buck» – one of the nicknames of American currency – is explained by the little «d’influences notables» in the coming days, argued Tastylive analyst Christopher Vecchio. “When we consider the calendar (…), apart from a few speeches from the American central bank (Fed), the data flow is really very weak” et “the start of the week is therefore characterized by a low trading volume” on the market, he added. No major economic indicators are expected this week in the United States.
The American economy in good shape
Mr. Vecchio believes, however, that “the dollar still has many opportunities” to continue its rise initiated following Donald Trump’s victory in the American presidential election, and thanks to the policies desired by the Republican candidate, considered inflationary. “The encouraging economic outlook for the United States, both in absolute terms and relative to other major economies, continues to support the trend” bullishness of the dollar, observed in a note Elias Haddad, of Brown Brothers Harriman.
The «greenback» – another nickname for the dollar – also remains supported by bond rate differentials between the United States and other major countries. “Regardless of what the next president of the United States does, the American economy has grown so much faster than that of its peers, (…) that the rate cut by the Fed will probably be less significant than that of its peers. of the European Central Bank, the Bank of England or any other major central bank”argued Mr. Vecchio, with the exception of the Bank of Japan. “It is for this reason that the dollar maintains a significant advantage over its counterparts”he concluded.
Canada