London (awp/afp) – The dollar rose on Tuesday, driven by the prospects of Donald Trump's inflationary policies, while other safe haven values such as gold and the yen benefited from market fears on the geopolitical level.
Around 3:15 p.m. GMT (4:15 p.m. in Paris), the American currency climbed 0.24% against the euro, to $1.0573, and advanced 0.31% against the pound, to $1.2639.
After a small decline the day before, the greenback regained momentum on Tuesday, while the probability of a rate cut by the Federal Reserve (Fed) during its next meeting on December 17 and 18 diminishes, underlines Patrick Munnelly, of Tickmill.
“The markets consider the budgetary expenditures planned” by President-elect Donald Trump, namely “higher customs duties and tougher immigration, as inflationary,” notes the analyst, and “could thus hinder reductions in Fed rate.
In the euro zone, inflation was posted on Tuesday at 2% year-on-year in October, a rate in line with expectations, which did not hinder the fall of the euro.
On Tuesday, gold gained 0.54% to $2,626.20 per ounce, and the yen also strengthened (+0.36%).
These safe havens are riding the wave of geopolitical anxiety generated by Russian President Vladimir Putin who signed the decree on Tuesday expanding the possibilities of using nuclear weapons, after the United States authorized kyiv to strike Russian soil with its long-range missiles.
Recognizing a “serious escalation”, Kathleen Brooks, of XTB, interviewed by AFP, however believes that if this threat is not carried out, it “could be short-lived” and that “the appetite for risk could return to the markets.
The Bank of England (BoE) must maintain a gradual approach in its rate cuts, in order to gauge the impact of the new Labor government's budget, its governor, Andrew Bailey, also said on Tuesday.
In its last report in November, the BoE estimated that this budget presented at the end of October would increase inflation in the United Kingdom by just under half a percentage point at the peak of its effect in 2026, compared to forecasts of 'august.
But questioned alongside other members of the BoE by the Parliamentary Treasury Committee, Mr Bailey argued that the measures announced at the end of October could also pull inflation “down”, in the event of “considerable weakening of the market of work, with downward pressure on wages.
According to him, the increase in employer contributions for employers is likely to lead to job losses.
According to Jane Foley, analyst at Rabobank, who responded to AFP, companies could reduce their workforce or grant fewer salary increases, but in a second step, after only having passed on this increase in their contributions to the national insurance.
Cours de mardi Cours de lundi 15H15 GMT 22H00 GMT EUR/USD 1,0573 1,0598 EUR/JPY 162,91 163,92 EUR/CHF 0,9328 0,9359 EUR/GBP 0,8364 0,8359 USD/JPY 154,09 154,66 USD/CHF 0,8822 0,8830 GBP/USD 1,2639 1,2678
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