Dollar surges ahead as euro demand drops

Denise Jackson

The single European currency saw significant drops in its value this week after the US dollar continues to see a demand surge.

The euro was down to its lowest position since May of 2017 in its pair against the US dollar.

It was recorded at $1.0904 at one stage.

This came largely as a result of the dollar surging ahead.

The dollar index, an artificial tool used to aggregate the performance of six other currencies from around the world and compare them to the dollar, was up by 0.1%.

It reached 99.27 at one stage, which represented its best performance in almost a month.

The dollar’s performance was somewhat unexpected in light of the ongoing political instability which the country is seeing.

President Donald Trump has been hit by the start of an impeachment investigation against him, although it is unlikely to see him removed from office.

However, he suffered a blow yesterday when a report from a whistle blower believed to work for the CIA was damning.

It appeared to suggest that Trump asked the President of Ukraine to interfere in the upcoming US election by smearing Democratic candidate Joe Biden.

It also suggested that Trump’s administration appeared to attempt to cover up the scandal.

Broader geopolitical trends also showed no signs of weighing on the dollar across the course of the day.

However, they were largely positive – at least relative to recent months.

A report from a US media outlet confirmed that trade talks between the US and China aimed at averting further tariff raising moves are scheduled to take place in mid-October in the US.

A Chinese government official added that the country was happy to scale up the volume of purchases it makes from the US.

None of this appeared to affect the dollar, however, which showed signs of continuing to be in demand over the next few days.

The British pound, however, ended its recent run of good news – although this time the cause did not appear to be directly related to parliamentary goings-on related to Brexit.

Sterling went down by a third of a percentage point over the course of early trading on Friday morning, reaching a fortnightly low point of $1.2285 in its pair with the US dollar.

This appeared to occur due to a statement from Michael Saunders, who sits on the Bank of England’s Monetary Policy Committee.

Saunders implied that the Bank would consider an interest rate cut in the event that uncertainty around Brexit raged on with no clear end in sight.

The positive sounds coming out of China in relation to international trade helped the Australian dollar over the course of the day in its pair with the US dollar, although not by much.

It is generally accepted that the Australian dollar performs better when China succeeds given that there is a strong reciprocal trading relationship in place between the two nations.

On this occasion, however, the New Zealand dollar also posted a slight rise – suggesting that there is some renewed optimism across the Asia-Pacific thanks to the developments with China and the US.

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Denise Jackson
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