The USD is higher across the board, and many wonder what can make the USD rise stall? Looking ahead at the year’s end calendar, there’s little to make USD bears happy.
On every currency pair you look, the dollar gained in 2018. EURUSD is down from 1.25 to 1.13, USDJPY rose from 106 to 113, AUDUSD simply collapsed, while GBPUSD trades around 1.25 after touching values above 1.40 earlier this year. Even BTCUSD is down a touch after breaking below the all-important $6000 level.
It sounds like a USD story in the currency market, and that’s the question many traders struggle to answer: how long will this winning streak last? Brexit Uncertainty Hurts the Pound and Euro
The truth is that the Fed raising rates is one reason for investors to look at the USD in the search for a higher yield. But the alternatives just aren’t there.
Brexit negotiations hurt both the British Pound and the Euro this year. Would you invest in a currency not knowing how the talks will end?
The other day Theresa May delayed the vote on the Brexit deal, out of fears it won’t pass. The GBP was simply clobbered as investors don’t have patience anymore.
In the Eurozone, the ECB is set to deliver a hawkish press conference at this Thursday’s meeting. However, the Euro has troubles popping higher, even though it holds above the all-important 1.13 level. Trump-Fed War: Who Will Win?
On the other side of the Atlantic, President Trump criticized the Fed’s Powell for raising the interest rates too fast and potentially hurting the economy.
The Fed so far responded with a dovish speech that allowed other currencies to gain against the USD, but it turned out to be only temporary. Next week the Fed is poised to raise the federal funds rate once again, to 2.5% from 2.25%.
Considering that this is the world’s reserve currency and it has one of the highest interest rate levels in the capitalistic world, it is hard to argue against the rise of the USD.
If anything, the current trend is set to continue, at least until other central banks jurisdictions start raising rates at the same pace.
All in all, the USD had a magnificent year, making it a hard time for bears to build a solid case. Judging by everything said here, the path of least resistance into the end of year flows remains the same: a rising USD as scarcity becomes more evident.
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.