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There is a notable surge in the strength of the US dollar
in the London financial market.
“In the London financial market, there is a notable surge in the strength of the US dollar”
The November Consumer Price Index (CPI) for France revealed a modest growth of 3.4% year-on-year, significantly below market projections. Combined with the recent weakness observed in Germany’s CPI, this has drawn attention to a deceleration in the inflationary trajectory within the Eurozone. Consequently, there is a heightened anticipation of the European Central Bank (ECB) considering early measures for interest rate cuts, leading to a pronounced sell-off of the Euro. Breaking through the critical level around 1.0960, which served as a support zone in both overseas and Tokyo markets yesterday, triggered an escalation in selling momentum, prompting the activation of stop-loss orders. The Eurozone Consumer Price Index, disclosed at 19:00, reported a year-on-year figure of 2.4%, falling short of expectations and further reinforcing the downward trend in the Euro, resulting in trading around 1.0910. Additionally, the increase in US bond yields played a role in amplifying Euro weakness and Dollar strength, as the yield on the US 10-year Treasury rose from the 4.25% range to just below 4.3%.
Against the backdrop of the general upswing in the US dollar, the Dollar/Yen also experienced a rebound. In the Tokyo market, it initially dipped below 147 yen in the early morning, maintaining a fluctuating pattern around this level. As the overall ascension of the US dollar persisted into the London market, the Dollar/Yen furthered its gains, reaching approximately 147.70 yen.
Euro/Yen, commencing trading around 161.40 yen, encountered a selling trend that led to a decline to about 160.60 yen, propelled by the Euro’s retreat influenced by the French Consumer Price Index. Subsequently, as Dollar buying and Yen selling intensified in the Dollar/Yen pair, Euro/Yen rebounded from its lows. Buyers entered the market, facilitating a recovery to around 161.30 yen, significantly mitigating a substantial portion of the morning’s decline.
Pound/Dollar, hovering around 1.2700, exhibited a bearish turn with the decline in Euro/Dollar, reaching the 1.2630 range. Against the Yen, it initially mirrored a downward trajectory akin to Euro/Yen but managed to recoup most of the initial losses in subsequent movements.
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