Investing.com – The US dollar climbed to a new high Friday while the euro fell as data continued to illustrate the weak state of the Eurozone economy.
At 05:00 ET (10:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.6% higher at 107.614, after earlier rising to its highest level since early October 2023.
The dollar is moving relentlessly higher
The dollar has risen about 3% so far this month in the wake of Donald Trump’s victory in the presidential election, on expectations that his policies could reignite inflation and undermine the Fed’s ability to cut rates could limit.
The release of solid employment data on Thursday also helped the tone, which unexpectedly slowed.
“However, it was some Fed-speak that probably encouraged dollar buying when John Williams – not usually a hawk – said that the US is ‘not quite there yet’ on inflation and that the labor market needs to cool further to can relax. Analysts at ING wrote this in a note.
According to CME’s FedWatch Tool, markets now see a 57.8% chance of a 25 basis point cut, up from 72.2% a week ago.
The safe haven status of the US currency has also been a boon given the recent escalations in the conflict between Russia and Ukraine.
“Markets are clearly taking the escalation of the war between Russia and Ukraine more seriously, fueling a broader rotation to secure assets like the dollar,” ING said.
The euro falls to its lowest point in two years
In Europe, it fell 0.8% to 1.0389, falling to a two-year low, with the single currency weighed on by the region’s weak economic outlook and battered by events in Ukraine this week.
Business activity in the euro zone took a surprisingly sharp turn this month as the bloc’s dominant services sector shrank and manufacturing sank deeper into recession, a survey showed on Friday.
The preliminary , compiled by S&P Global, fell to a 10-month low of 48.1 in November, below the 50 mark that separates growth from contraction.
“The publication has gone from being almost ignored to becoming a de facto critical input for policy decisions, given the Board of Directors’ increased focus on forward-looking growth indicators,” ING said.
Earlier in the session, data showed the German economy, the largest in the euro zone, grew less than previously estimated in the third quarter and expanded by 0.1% in the third quarter of 2024, down from preliminary growth of 0.2%.
fell 0.4% to 1.2536, falling to its weakest level against the dollar since May, after British business output shrank for the first time in more than a year.
The preliminary S&P Global Flash fell from 51.8 in October to 49.9 in November – below the significant level of 50.0 for the first time in 13 months.
Yen gains after Japanese CPI
fell 0.1% to 154.38 after Japanese inflation grew slightly stronger than expected in October, while the core measure came in above the central bank’s annual target, fueling expectations for another Bank of Japan rate hike stayed.
rose 0.2% to 7.2491, near the highest level in four months.
The yuan has depreciated as much as 1.8% against the dollar so far in November as inadequate signals on Chinese stimulus also weighed on local markets.