The US Dollar steadily marched toward a 13½ year peak ahead of the Thanksgiving holiday as investors anticipate that a Donald Trump-led administration will result in renewed growth and higher interest rates. The US Dollar Index, the market’s measure of the greenback’s strength against major rivals, has climbed nearly 3% since the US Presidential election. Donald Trump has said that he would increase fiscal spending through infrastructure improvements which should ratchet up inflation. With a US holiday tomorrow, analysts expect the US dollar to generally be flat against the Yen and Euro, with light trading on Friday.
As reported at 10:30 am (GMT) in London, the EUR/USD was trading at $1.0614, down 0.10%. The USD/JPY was down 0.11% to trade at 110.977 Yen. The GBP/USD was down 0.37% to trade at $1.2376.
Euro Watchers Put on Notice
As trade resumes in earnest next Monday, analysts say that the Euro should be watched carefully given the possible political risks of the coming months. There will be an institutional referendum on the ballot in Italy and Germany and France will both be holding general elections early in 2017. The outcomes of those events are likely to keep FX traders wary which will drive down the common currency.