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US dollar sees highest point in two years after boost to economy

The relatively strong performance of the US economy gave the dollar a significant boost on Monday and into Tuesday.

An “economic surprise” index released by major bank Citigroup indicates that the US was further away than ever from Europe in economic terms.

The dollar index, a mechanism designed to monitor the progress of the greenback in its pairs with over five different currencies from around the world, was up by a fifth of a percentage point on Tuesday – reaching 99.58 at one stage.

This represented its best performance in almost 30 months, and buoyed investors in the currency – which has managed to surge ahead despite all kinds of domestic and geopolitical complications.

The President of the US, Donald Trump, is facing an impeachment process by the US House of Representatives over claims he asked a foreign leader to interfere in the presidential election due to take place next year.

There is still no indication that the ongoing trade battles between the US and China are set to slow down any time soon, although talks are expected to take place soon.

The dollar’s rise was fuelled even further by declines in other parts of the world.

In Germany, for example, the consumer price index was found to have gone up – but by a smaller amount than had previously been expected.

This follows a series of gloomy German data releases, and a persistent belief that the largest country in the Eurozone might be about to enter a recession.

It also came in spite of the fact that the European Central Bank has pushed forward a stimulus package and given the region’s economy a range of boosts.

Overall, consumer prices in the Euro-wide bloc are expected to reveal a rise across September of 1%.

This is expected to be interpreted as disappointing, and also as below both the European Central Bank’s own targets and the level of last month.

In Australia, the central bank there went ahead with a much-forecast plan to cut interest rates even further – leading to problems for the local currency.

The Australian dollar was down by 0.7% in its pair with the US dollar and was seen trading at $0.67 at one stage.

This came as the Reserve Bank of Australia moved ahead with plans to bring down its cash interest rate to 0.75% in an attempt to stimulate the country’s economy.

Over the sea in New Zealand, the local dollar there also plummeted in a sign of the interdependence between the two nations.

It was recorded at $0.6238 at one stage, which was its lowest point for four years.

This also came in part due to predictions that the Reserve Bank of New Zealand would follow in the footsteps of Australia when it next meets, although this is not yet certain.

Lower than preferred business confidence figures also played a part in the currency’s drop.

In China, trading volumes were low on Tuesday morning after the National Day holiday – a week-long celebration of seven decades of communist rule – began.

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