It has been more than two years since the dollar was this high against the euro. This Thursday, around 2:30 p.m. GMT (3:30 p.m. in Paris), the American currency climbed 0.28% against the European currency, to 1.0321 dollars per euro. The latter had even reached $1.0314 earlier in the day. Either its best level since the end of November 2022.
This is less due to a fall in the euro than to a strong rise in the dollar. The one-This is driven by the imminent return of Donald Trump to the White House on January 20. “This is simply a continuation of the dollar’s upward trend seen during the latter part of last year, particularly after Donald Trump’s victory”confirms, in fact, Russ Mould, analyst at AJ Bell, interviewed by AFP.
The US president-elect plans policies likely to boost US inflation. He thus assured that in the event of a return to the White House, he would impose customs duties of 10 to 20% on all products entering the United States, or even 60 to 100% on products coming from China. The day after his election, he insisted that one of his first decisions upon taking office would be to introduce a first series of customs duties of 25% on products from Canada and Mexico. , two countries that have signed a free trade agreement with the United States.
The risk of a “massive” price increase
However, this electoral promise could lead to an increase « massive » prices, warned Lael Brainard, the main economic advisor to outgoing President Joe Biden, on December 19. According to a survey of 500 American companies by the recruitment company Resume Templates, 82% of them plan to increase their prices if new customs duties are actually put in place.
A risk which is beginning to be taken into account by the American Federal Reserve (Fed), which has significantly revised its inflation forecast for 2025. It expects it to be around 2.5%, while it hoped to bring it down to 2.1 % during its previous forecast, in September.
For his part, Donald Trump believes that, “used properly”customs duties can, according to him, have a positive impact on the American economy.
-The Fed remains cautious
The fact remains that the context pushes the monetary institution to be cautious. This is evidenced by its announcements last December, when it published its economic forecasts. Certainly, it revealed a new reduction in its rates, of 0.25 percentage points, to bring them into a range between 4.25% and 4.50%, but it now only plans two, likewise amplitude, over the whole of 2025.
In comparison, analysts say the European Central Bank (ECB) is likely to cut rates at a faster pace than the Fed, given weak growth in the euro zone, where inflation is hovering near the target of 2 % set by the ECB. On the side of the Bank of England (BoE), the market still projects two to three cuts in 2025.
This Thursday, the greenback gained 1% against the British currency after peaking at its highest since April 2024, at 1.2435 dollars per pound.
The yen is holding steady
Conversely, the yen is holding up, benefiting from the optimism of Japanese economists towards further rate hikes from the Bank of Japan (BoJ) in 2025.
Around 2:30 p.m. GMT, the Japanese currency was up +0.31% against the dollar, at 156.83 yen. The continued weakness of the yen could, however, “increase pressure on the BoJ (Bank of Japan) so that it raises its rates earlier this year, in January, rather than waiting until March”judged Lee Hardman, analyst at MUFG.
