Saturday, 21 May 2022

Euro tumbles to 14-year low against the dollar

PARIS: After struggling to gain momentum for much of the day, it seems the FTSE is rocketing on the back of a dip in sterling and the continued climb of indices across the Atlantic. Since the US markets reverse yesterday’s losses on opening – in spite of the dollar’s continued climb – the FTSE has climbed 55 points from 6,958.08 to 7,004.94 at 4.30pm (GMT).  Commenting, Chris Beauchamp, chief market analyst at IG, says markets appear unfazed by the Fed’s interest rate hike due to the so-called “Santa Rally” taking hold. “Despite a woeful performance from the mining sector and falling oil prices, the FTSE 100 is ending the day firmly in positive territory. Clearly the number of stocks expected to benefit from rising US rates outpaces those who will suffer from lower commodity prices. Investors are spending their first 24 hours in a new world, one dominated by rising US interest rates plus an impending fiscal stimulus that is meant to rescue the US from economic malaise. With the euro in full flight it is not surprising to see eurozone markets racing, and this is probably something we should get used to for the year ahead. Meanwhile, the FTSE 100’s performance will depend on whether the rising dollar does too  much to torpedo the commodity rally, or whether higher rates will lift bank stocks sufficiently in the year ahead to offset this.

15 December 2016 may well prove to be a microcosm of what 2017 has to offer.” The cost of living in the U.S. rose for a fourth straight month, adding to signs that inflation is approaching the Federal Reserve’s goal. The consumer-price index climbed 0.2 pc in November, matching expectations among economists, after a 0.4 pc gain the previous month. Excluding volatile food and fuel, the core measure also rose 0.2 percent on October’s figures. The Labor Department cited rising house and fuel prices as the main causes of rising CPI, with a sustained rise in prices increasing the likelihood that the Fed will follow through with its predicted series of hikes, expected to take interest rates to between 1.2-1.5pc by the end of 2017.  US manufacturing PMI also hit a 21-month high, despite a dip in industrial production.

Check Also

Cryptocurrencies tumble amid China crackdown

REUTERS/Dado Ruvic/Illustration/File Photo TOKYO – Cryptocurrencies tumbled on Monday as China’s crackdown on bitcoin mining ...