Euro’s fall pushes dollar’s high

On Friday, the dollar appeared set to register the second week of significant gains versus the euro. The traders bet on interest rates increasing quicker and higher on the North Atlantic’s western side, whereas sterling and the kiwi remained firm. The euro has been the most fluctuated currency this week. After recovering from falling from $1.1263 to $1.1356, it remained vulnerable as fundamentals and positioning favor the dollar.

This week, the euro fell 0.7%, allowing the dollar index to increase 0.5 % and reach a 16-month high. However, slightly shy of that last time, at 95.629.

Outlook on Euro

 Kit Juckes, the Societe Generale strategist, referred to this matter and mentioned that when the euro fell below $1.10 in the aftermath of the financial crisis, it was accompanied by a large euro short position.  

Following last week’s inflation surprise, retail sales in the United States outperformed forecasts this week. Meanwhile, COVID-19 is soaring in Europe, auto sales are down for the fourth month in a row, and central bankers are pledging to keep rates low.

The focus will be on central bank speakers on Friday, with European Central Bank President Christine Lagarde speaking at 0830 GMT, Bank of England economist Huw Pill speaking at 1200 GMT. In the following, the Federal Reserve officials will speak at 1545 GMT and 1715 GMT. The expectations regarding the Joe Biden’s announcing of his nominee to lead the Fed before Nov. 25 are factors keeping moves in the market small. 

Brent Donnelly, trader and President at analytics firm Spectra Markets noted that the market would buy dollar/yen only if Powell is nominated since he is known to take more hawkish approaches toward rate settings in the face of inflation.

LIRA falls, Bitcoin loses

In the developing markets, the Turkish lira has hit a new low. In contrast, bitcoin has dropped below $60,000 and will have its worst week in six months, with cryptocurrency’s mood shaky. Among other major currencies, the yen was poised for a weekly loss of around 0.4 percent on Friday. However, it had rebounded to 114.33 per dollar since hitting a five-year low of 114.97 this week.  

The kiwi rose 0.7 percent on Thursday and has been stable for the week as traders bet on the RBNZ becoming more hawkish and raising rates by 50 basis points (bps) next week. Swaps markets have put in a 40% possibility of a 50-basis point raise.

Bitcoin was on track to have its worst week since May, with a 13 percent decline. At $57,033, it was at a three-week low.