After the market tries to take a breath following the U.S. presidential election, FX (and David Coote's social mentions) are rampant with activity. Trump has been a surge of energy injected into almost all markets, creating massive strength for the Dollar; not to mention the Crypto market which has seen Bitcoin at all time highs. Trump has also formed The Department Of Government Efficiency headed by Elon Musk (aka the 'Dogefather') which led to Musk's heavily endorsed Dogecoin rising dramatically. The world is a crazy place... And so has been the FX market this week, here's the latest.
Key Updates:
- GBP Loses Ground: The pound has dropped to a three-month low trading around 1.265 against the Dollar.
- US on a Winning Streak: The Dollar is at a one-year high, gaining a robust 5.3% against a basket of global currencies in the past two weeks. Markets are 📈.
- Euro Hits a Low: The Euro has dipped 3.7% against the Dollar in recent weeks, hitting 1.05 against the Dollar.
GBP
The Pound is trading around 1.265 USD, a three-month low, due to both dollar strength and recent UK inflation data. After starting the week where investors continued to digest the Bank of England’s (BoE) interest rate decision on Thursday. This was compounded by UK unemployment also leaping from 4% to 4.3%, higher than the forecast 4.1%.
The pound’s current three-month low against the dollar presents an exciting opportunity for anyone holding dollars. With the Bank of England’s recent cuts hinting at further rate adjustments, converting USD to GBP or any other currency is better than it has been for a while
USD
Riding high from Trump buzz, the USD has seen gains in the 5-7% range against multiple currencies in the past month alone. With pro-business expectations, like tax cuts and potential trade deals, the Dollar could continue climbing.
With the Republicans likely to win both chambers of Congress, President-Elect Donald Trump will have a clear path to enact tax cuts and tariffs. These measures could push up inflation, thereby forcing the Federal Reserve to slow its pace of interest rate cuts. With the Fed considering slowing down rate cuts, there’s potential for even more Dollar appreciation.
EUR
The euro has taken a tumble, hitting a low we haven’t seen since November 2023 – down roughly 3.7% in just two weeks against the dollar!
The euro’s current dip, trading at 1.05 USD from 1.08 just last month, is eye-catching for Dollar holders looking to make the most of each Dollar they convert. This shift has opened up the best EUR-USD conversion rates we’ve seen since early 2023.
Final Thoughts:
Given the way these markets are moving, this is not the week to sit on the sidelines. These kinds of shifts don’t come around every day. I always say, you know when the markets are high and when they're low, but it's impossible to predict when they're the highest or the lowest..... Also, check out our new website. We're not shouting about it yet but we'd love to get early feedback if you have any.
