admin On Wednesday, U.S. dollar hits high as strong economic data decreased the chances the Federal Reserve would continue its rate-cutting cycle in 2020. The dollar index increased by 0.16% reaches at 97.38.
In November, industrial production bounced back in the United States mostly because a strike by General Motors Co workers ended. Suggesting that the U.S. labor market remains strong, housing starts and building permits were both reported to have grown more than expected and October JOLTS job openings were better than predicted.
According to CME Group’s FedWatch tool, it is expectated that the Fed will cut rates from the current 150-175 basis point level are 2.2% for the January meeting, 4.3% for March and 12% for April. The same tool shows through December 2020, a 50% chance that rates will remain at current levels.
Analysts at Brown Brothers Harriman said, “Bottom line: the U.S. economy remains on solid footing even as the rest of the world struggles.”
Against the euro, dollar increased by 0.23% to $1.112. The single currency has struggled to stay above its 200-day moving average of $1.115. The dollar was also 0.39% higher against the pound to $1.308, which has lost all its election gains on fears Britain could leave the European Union without a trade deal.
The Brown Brothers Harriman analysts stated that the dollar index is up two days in a row for the first time since the last week of November, and has retrieved over a third of its December fall.
Robert Lighthizer, U.S. Trade Representative stated that the United States may raise tariffs on European goods as it tries to shrink its chronic trade deficit with the continent, re-igniting worries about the export-driven euro.
In a year by investment flows from China, the Hong Kong dollar hit a five-month high, cooling unrest and a global unwinding of long positions in the greenback. It remained slightly off its July high of 7.7822; it will hit a 2-1/2 year high if it breaks below that level.
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