2023-07-27 20:18:28
Around 10 p.m., the greenback took 1.07% once morest the single currency, at 1.0968 dollars for one euro. It also gained 1.24% once morest the pound sterling, at 1.2784 dollars for one pound.
The dollar appreciated sharply once morest most major currencies on Thursday, whipped by several indicators which testify to the resilience of the American economy and offer room for maneuver to the Fed to remain offensive on the monetary level.
Around 8:00 p.m. GMT, the greenback gained 1.07% once morest the single currency, at 1.0968 dollars for one euro. It also gained 1.24% once morest the pound sterling, at 1.2784 dollars for one pound.
“This week mightn’t have been better for the dollar,” summarized Tastylive analyst Christopher Vecchio.
On Wednesday, following the US central bank (Fed) raised its key rate by a quarter of a percentage point, its president Jerome Powell left the door open for an additional hike in September, without giving a clear signal.
On Thursday, all of the day’s indicators confirmed that the US economy is doing much better at this stage than anyone expected at the start of the year.
Growth thus notably accelerated in the second quarter, to 2.4% on an annual basis, once morest 2.0% for the previous three months.
These figures propelled bond rates upwards. The yield on 10-year US government bonds thus crossed 4% for the first time in two weeks.
At the same time, European rates only tightened moderately, following the decision of the European Central Bank (ECB) to also raise its main key rate by a quarter of a point.
The spread between German and US ten-year rates rose to its highest level in more than seven months, to the advantage of the latter, which worked for the dollar, making investments in this currency more attractive.
“I would say that European rates have peaked”, explains Christopher Vecchio, for whom the euro “has passed its peak for the year” and might experience difficult months once morest the “greenback”, one of the nicknames of the dollar.
For him, the Fed still has room to tighten its monetary policy, unlike the euro zone, whose economic situation is deteriorating at an accelerated rate.
Like Jerome Powell, the President of the ECB, Christine Lagarde, indicated that a break, like a new rise, was possible at the next meeting of the Governing Council in September.
But while they still clearly gave the advantage, two weeks ago, to the scenario of a new rate hike by the European institution, operators now see this scenario as a minority one, which undermines the common currency at 20 European countries.
Against the almighty dollar, only the yen floated, benefiting, according to Christopher Vecchio, from new rumors regarding a modification of the cap on 10-year bond rates by the Bank of Japan (BoJ), which would constitute the beginning of a turn monetary.
The BoJ is due to make its monetary policy decision on Friday, following its meeting.
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