Loading...

Home pages - full list (A-Z)

US Dollar Strikes 18-Month High, Will Lose Value in 2019

Against a basket of currencies, the US dollar climbed on Friday to an 18-month high as investors sought safer assets in the aftermath of disappointing economic and political developments in Europe and China. Given a growing consensus for dollar weakness in 2019, now might mark an opportune moment for exchanging dollars into foreign currency.

#News #CNY #EUR #GBP #USD
Email share     Facebook     LinkedIn    Twitter

The US Dollar Index struck an 18-month high on Friday after European and Chinese economic data disappointed, and as investors sought safe havens following a “nothing new” Brexit meeting between European leaders and British Prime Minister Theresa May. Next week’s widely expected increase in US interest rates is also on investors’ minds.

By lunchtime in London, the dollar had gained the best part of a cent against the euro; it strengthened to $1.127 after IHS Markit’s preliminary PMI for December came in at only 51.3—the lowest eurozone reading since 2014.

“Slowing [eurozone] economic growth was exacerbated by protests in France and on-going weak demand for autos,” IHS Markit said. The group also noted growing concerns over Brexit.

Needless to say, Brexit continues to dominate headlines, and Friday’s “nothing new” meeting between European leaders and British Prime Minister Theresa May allowed the dollar to appreciate versus the pound.

May was once again doing the rounds in Brussels with the intent of landing legal and political assurances over the Irish backstop—the most contentious feature of her current deal.

Per reports, May achieved little. When all was said and done, she could only show for herself “a five-point pronouncement on a single sheet of A4 paper which, if you look closely, states the obvious and offers nothing new to anyone who knows anything about the withdrawal agreement,” wrote Die Zeit’s Marlies Uken.

As a consequence, pound-dollar slipped 1.25 cents to $1.253.

Like the eurozone, China is slowing. Figures on Friday indicated that Chinese industrial production increased by only 5.4 percent in the year to November, which equals the lowest reading this decade.

The dollar rallied to buy 6.905 yuan.

At 97.71, the aforementioned US Dollar Index—a measure of the greenback’s performance against 6 of the other 9 G10 currencies—is now 6 percent higher than its level on January 1st and is on course to post its tenth monthly gain this year. The strong dollar trend is, however, nearing its end, analysts believe.

A downturn in the US economy might be among the reasons for dollar weakness in 2019, as will skepticism over future Fed interest rate hikes, JP Morgan has said.

Morgan Stanley, too, is bearish on the dollar. A senior analyst at the bank recently expressed a belief that the dollar is overvalued by as much as 15 percent.

For Scotiabank, euro-dollar ends 2019 at $1.30—indicative of a potential 13 percent decline in the US currency’s buying power.

 

Further Reading

 

Disruptors Challenging Australian Banks in Forex Price and Service: ACCC Report

Key Takeaways from the ACCC inquiry into currency conversion services. BestExchangeRates referenced among comparison sites playing an important role in customer awareness of the excessive currency margins charged by banks.

Last update: 1 Oct, 2019

AUD/GBP Between a Rock and a Hard Place – USD Strength

AUD/GBP versus AUD/USD and GBP/USD

Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.

Last update: 27 Aug, 2019

Australia Cuts Interest Rates to Record Low

RBA Australian dollar AUD currency news and forecasts

The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.

Last update: 14 Aug, 2019

  

Posted to: News

 
 
Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product.
 

Get a Better FX Deal when you Send and Spend Abroad.

 

Do NOT follow this link or you will be banned from the site!