Dollar index surges to 14-year high
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by Abi Moses on 16th November, 2016
According to new reports the dollar soared to its highest position against a range of currencies since April of 2003, with many analysts, major banks and investors predicting euro-dollar parity in the coming weeks. Following a rally encouraged by the post-election surge in U.S. bond yields, many major banks have been cautious on the dollar's immediate prospects, suggesting there are more financial movements to come in the immediate future.
With Trump's election expected to encourage an inflationary push rises in Federal Reserve interest rates are unescapable, advancing past $1.07 per euro for the first time since the end of December of last year.
"Broad gains are clearly meeting more resistance, as a December Fed hike is now 95 percent discounted and much uncertainty still surrounds the broader direction of U.S. economic policy under President-elect Trump," said Adam Cole, head of G10 FX strategy with RBC in London.
"Can the dollar go to parity with the euro? Well, we are only 7-8 percent away so probably yes," said Adnan Akant, head of foreign exchange at Fischer Francis Trees and Watts, a New York based institutional currency manager owned by BNP Paribas.
"Under Trump, we are looking at fiscal policy divergence (with Europe and Japan) which should be very positive for the dollar. Protectionism is a risk, but if that is focused on emerging markets, it may perversely also be a dollar positive."
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