Last month of this fall looks like the best time for the US currency over the past couple of years. USD gained more than 3 percent against the EUR, and more than 5% against the Japanese yen. There are two main reasons for such a serious strengthening of USD, and both are related to the fact that the US economy is showing excellent results and is likely to continue to strengthen them in the future.
The fundamental statistics from the United States was much better than in other major economies in the world: inflation has increased, and employment growth accelerated. All the same, namely the possibility of fiscal and monetary stimulus caused a strengthening of the USD and US currency attracted buyers from around the world.
The Fed is still the only major regulator in the world, which intends to raise interest rates, and most recently the chairman of the Federal Reserve Janet Yellen made it clear that at the moment there are all necessary conditions for raising the key rate as early as next month.
At first, there were fears that a sudden increase in the profitability of US government bonds will make her to soft the view, although in her speech before the joint finance committee Yellen expressed confidence in strengthening of the US economy and in the movement of its indicators to the objectives identified by the regulator.
The Fed chief even warned that the delay in raising rates could have some risks. After listening to the main financier of the USA, the markets are now assessing the likelihood of rising the interest rates in December to 96%.
Besides all this, the United States is now the only major country that has a very real and reasonable prospect of the introduction of a large program of fiscal expenditure. The victory of Republican Trump has caused a huge shift in the financial markets, which weakened the bonds, but cause serious strengthening of the dollar - up to the highest levels in many years, as well as significantly helped US stocks to achieve their historical records.
Republican victory was very unexpected, but Trump’s promise for significantly lowering taxes and increasing infrastructure costs have forced global players to re-estimate the short-term and long-term results of his political projects. They immediately turned their positions after his victory and chose to trade on USD and national shares.
This trend is likely to continue. In the current week in the United States will not be very important financial releases and on Thursday the US markets will be closed for Thanksgiving Day. Thus, we can expect investors to fix profits after jumps of last week.
