The dollar soars as it climbed to its highest levels since June 2017 on Wednesday. Dovish comments by the BoJ and its decision to keep the monetary policy steady and weak Eurozone growth figures weighed. Further, weak data from China strengthened the greenback and attracted Forex traders.
The euro zone economy grew less than expected in the third quarter. Meanwhile U.S. consumer confidence rose to an 18-year high in October. Political uncertainty in Germany, following chancellor Angela Merkel’s decision to step down in 2021, is also pressuring the single currency.
An overnight rally in equities boosted the dollar, which now runs towards the seventh consecutive month of gains. Why the traders have been buying the dollar for the last seven months? The answer is the growing divergence of the strength of the U.S. economy relative to its global peers. Also, appetite for risk as evident from stronger stock markets and higher U.S. Treasury yields has lifted the dollar recently.
The dollar rose against its major traded rivals to 97.07 which is up 10% from February lows. It is holding firm against the euro at $1.1356.
Forex – Commodities – Dollar soars climbing to 16-month peak
The Sterling rose 0.3% far from 10-week low. The pound also gained ground against the single currency, rising 0.2%. Traders are focusing on the BoE’s monetary policy meeting on Thursday.
Oil prices dropped on Wednesday for a third consecutive day, as global supply rose. Next week’s US sanctions against Iran did not weigh although the Iranian crude production is already limited. The prices are around $10 a barrel below four-year highs reached in the first week of the month. Brent crude oil dropped 40 cents to $75.51 a barrel after falling almost 1.8% during the last session. U.S. crude CLc1 was 25 cents lower at $65.93.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.