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The euro and sterling hit multi-month lows against the US dollar on Thursday, as the new business year began and investors prepared for Donald Trump’s return to the White House this month.
The euro fell 0.33% against the dollar to $1.032 shortly before 1:00 p.m. in London, hitting its weakest level since November 2022. Sterling fell 0.78% to $1.242, a record low. of eight months.
Optimism around the U.S. economy and stocks was in the spotlight as markets reopened after trading halted over Christmas and New Year’s. Wall Street Stock Futures were higher amid falls in Europe and the Asia-Pacific like him us dollar index (a comparison with a basket of currencies) rose 0.25%.
“(US) growth has continued to exceed forecasts as consumers and businesses have downplayed the impact of high interest rates, while the unemployment rate remains low,” said Susannah Streeter, director Hargreaves Lansdown Money and Markets, in a note on Thursday.
“Investors are hopeful that a golden scenario will be the story of 2025, amid promises of lower taxes and deregulation under a second Trump presidency.”
euro/US dollar
“The dollar continues to find support from expectations of Trump’s bullish dollar policies and fading conviction around the Federal Reserve’s 2025 rate cut path,” said Mohamad Al-Saraf, strategy associate. Danske Bank rates and currencies, in a note on Thursday.
Key data ahead to assess the strength of the US macroeconomic narrative include Thursday’s jobless claims and Friday’s ISM manufacturing report, along with next week’s nonfarm payrolls, Al-Saraf said.
He added that the euro was likely to return to parity with the US dollar in the medium term, a benchmark it last reached in November 2022. However, Al-Saraf said the market price for rate cuts less than two quarter points this year may prove too aggressive and could trigger a dollar correction along with any negative surprise in US data.
