The dollar does not lose momentum. The EUR/USD bounce was faded once again, and the main currency pair slid below the 1.12 mark to trade at the lowest levels since summer 2020. The "Buy the dollar dips" strategy still prevails. The dynamics of the currency market reshuffle should lose momentum. In the US, the long Thanksgiving weekend begins.
The dollar continues to attract capital like a magnet. The EUR/USD reached new lows and crossed the 1.12 level. The minutes of the FOMC meeting did not contain new clues about the intentions of the Federal Reserve. It was consistent with the statement of individual representatives of the monetary authorities. Some policymakers believe it makes sense to consider accelerating the abandonment of asset purchases and raising interest rates more quickly. Speculation is intensifying that such a step could take place as early as the first half of next year. The foundations of dollar strength remain valid in this light. They were also confirmed by the weekly news from the labour market. The number of new jobless claims fell below 200,000 for the first time since the late 1960s.
The same applies to the euro's weakness - its negative perception has been reinforced over the past several hours. Tuesday's relatively high PMI readings were quickly pushed aside by another important economic data, the German IFO index. Indeed, its value declined for the fifth consecutive month. While the US economy is growing again, the German economy is stagnating and may even contract in the fourth quarter. The industry is struggling with disrupted supply chains, and rising component prices and services are under pressure from a worsening epidemic. In January, Europe's most important economy was expected to grow by 4% this year, but now all signs point to GDP growth of just 2.5% year-on-year.
This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without acknowledgement of the source is prohibited.
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22 Nov 2021 8:03
Dollar continues to strengthen, euro below in the red (Daily analysis 22.11.2021)
The dollar does not lose momentum. The EUR/USD bounce was faded once again, and the main currency pair slid below the 1.12 mark to trade at the lowest levels since summer 2020. The "Buy the dollar dips" strategy still prevails. The dynamics of the currency market reshuffle should lose momentum. In the US, the long Thanksgiving weekend begins.
The dollar continues to attract capital like a magnet. The EUR/USD reached new lows and crossed the 1.12 level. The minutes of the FOMC meeting did not contain new clues about the intentions of the Federal Reserve. It was consistent with the statement of individual representatives of the monetary authorities. Some policymakers believe it makes sense to consider accelerating the abandonment of asset purchases and raising interest rates more quickly. Speculation is intensifying that such a step could take place as early as the first half of next year. The foundations of dollar strength remain valid in this light. They were also confirmed by the weekly news from the labour market. The number of new jobless claims fell below 200,000 for the first time since the late 1960s.
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The same applies to the euro's weakness - its negative perception has been reinforced over the past several hours. Tuesday's relatively high PMI readings were quickly pushed aside by another important economic data, the German IFO index. Indeed, its value declined for the fifth consecutive month. While the US economy is growing again, the German economy is stagnating and may even contract in the fourth quarter. The industry is struggling with disrupted supply chains, and rising component prices and services are under pressure from a worsening epidemic. In January, Europe's most important economy was expected to grow by 4% this year, but now all signs point to GDP growth of just 2.5% year-on-year.
See also:
Dollar continues to strengthen, euro below in the red (Daily analysis 22.11.2021)
The dollar strengthens for a week; the EUR/USD pair is near 1.13 (Daily analysis 17.11.2021)
Dollar on a wave of inflation expectations (Daily analysis 15.11.2021)
US labour market confirms Fed stance (Daily analysis 08.11.2021)
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