The US dollar fell on Monday, giving up some recent gains, as the selection of Donald Trump for US Treasury Secretary appeared to reassure the bond market, while the euro a ‘ rebounding from a two-year low hit last week.
At 05:05 EST (10:05 GMT), the dollar index, which measures the US currency against a basket of six other currencies, was trading 0.6% lower at 106.892, after rising two hit a year on Friday.
The dollar declines after Trump’s announcement
US President Donald Trump nominated Scott Bescent, director of the International Monetary Fund, for the post of Treasury Secretary on Friday, and the bond market welcomed this nomination, as Treasury bond yields fell.
However, Becent has also been a public supporter of a strong dollar and his support for tariffs, suggesting that any decline in the currency could be short-lived.
“We’re not sure if the recent rate hike in the US Treasury curve represents the market seeing it as a ‘safe hand,’ but it certainly doesn’t sound like someone who pushed the President- Donald Trump will choose a weak dollar policy. ,” analysts at ING said in a note.
The main economic focus this week on the economy this week is Wednesday’s Personal Consumption Expenditure Price Index, the Federal Reserve’s preferred measure of core inflation.
This indicator is expected to be “0.3% m / m flat slightly higher and will keep the market guessing if the Fed will cut in December after all,” said ING.
Recent high inflation data has seen the Federal Reserve take a dovish stance towards further interest rate cuts.
The Euro exchange rate is going up against the pound two years ago
In Europe, EUR/USD rose 0.6% to 1.0476, pulling away from Friday’s two-year low of 1.0332 after European manufacturing surveys showed broad weakness last week, while surveys the USA surprised on the higher side.
This economic weakness has led to markets pricing in more aggressive monetary easing from the European Central Bank.
“The view here is still that there is no financial crisis coming in the euro area and that the only way to deal with the current distress is for the ECB to cut interest rates faster than usual,” ING said.
The ECB has already cut interest rates three times this year but investors now see a 50% chance it will cut them by 50 basis points on December 12 instead of the usual 25 basis points with growth weakness and recessionary risks.
GBP/USD rose 0.4% to 1.2576, rebounding from a six-week low on Friday after the UK retail sales website disappointed, prompting the market to price in a greater chance of rate cut from the Bank of England.
However, Bank of England Deputy Governor Claire Lombardelli said on Monday that she was more concerned about the risks of higher – rather than lower – inflation than the central bank expected.
“I see the potential for both upside and downside risks to inflation to be broadly balanced,” said Lombardelli, in her first speech since joining the Bank of England in July.
“But at this point I’m more concerned about the potential impact if the upside comes, because that might require a more costly monetary policy response.”
Yen supported by lower US yields
USD/JPY fell 0.2% to 154.41, after falling 0.4% the previous week. The currency pair tends to follow movements in Treasury yields closely, and has risen sharply in the past two months as the yen has weakened.
“The Japanese yen has started to show some strength on the crosses. This has been helped by a shift in the fiscal and monetary policy mix.” “On the flip side, Japan’s fiscal stimulus is fueling the idea that the Bank of Japan will raise interest rates in December after all. Nearly 15 basis points of the 25 basis point hike are now priced in in.”
USD/CNY fell slightly to 7.2447, after rising 0.2% last week.
2024-11-25 12:03:00
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While the Eurozone economy faces challenges, some analysts argue that the euro’s recent rebound signals growing investor confidence. What factors, besides economic indicators, could be contributing to this renewed confidence in the euro?
## World Today News: Interview with Economic Experts
**Host:** Welcome to World Today News. We’re here today to dissect the fluctuating global currency landscape, specifically the recent shifts in the US dollar and the euro. Joining us are two esteemed economic experts: Dr. Emily Carter, renowned professor of international finance, and Mr. Alex Khan, seasoned financial market analyst. Thank you both for being here.
**Section 1: The Dollar’s Decline and Trump’s Treasury Pick**
**Host:** Let’s start with the US dollar. As the article highlights, it saw a dip following President Trump’s announcement of Scott Becent as his Treasury Secretary nominee. Dr. Carter, how significant is this selection in the context of the dollar’s performance, and what are potential ramifications of this decision for the global financial landscape?
**Dr. Carter:** The nomination of Scott Becent certainly raises eyebrows. While he’s known for his commitment to a strong dollar policy, his support for tariffs presents a potential paradox.
**Host:** Mr. Khan, you’ve been tracking market reactions closely. Could you shed some light on how investors are interpreting this appointment, and what long-term effects might we anticipate?
**Mr. Khan:**
**Section 2: The Euro’s Rebound and the Weakening Eurozone Economy**
**Host:** Moving on to the euro, the article mentions its recovery from a two-year low. However, this comes against a backdrop of economic weakness in the Eurozone. Mr. Khan, is this rebound sustainable, considering the economic challenges facing the region?
**Mr. Khan:**
**Host:** Dr. Carter, the European Central Bank has already enacted several rate cuts this year. What are your expectations for further monetary easing, and what impact might this have on the euro’s trajectory?
**Dr. Carter:**
**Section 3: The British Pound and Uncertainties Amidst Brexit**
**Host:** let’s turn our attention to the UK, where the pound sterling also experienced fluctuations. Dr. Carter, how is Brexit uncertainty impacting the pound’s performance, and what factors do you anticipate shaping its future?
**Dr. Carter:**
**Host:** Mr. Khan, the Bank of England has hinted at potential rate cuts to combat economic slowdown. How might this decision affect the pound’s value against other major currencies?
**Mr. Khan:**
**Conclusion**
**Host:** Thank you, Dr. Carter and Mr. Khan, for sharing your valuable insights. It’s clear that the global currency market remains a complex and dynamic arena. As we navigate these uncertainties, informed analysis and open discussions like this are crucial to understanding the evolving landscape. We’ll continue to monitor these developments closely and provide ongoing coverage on World Today News.
This framework includes open-ended questions targeting diverse perspectives and encourages a thoughtful discussion on the intricate interplay of economics, policy decisions, and currency market fluctuations. Remember to tailor the questions further based on the specific areas of expertise of your guests and the latest developments in the global financial news.
