- Resurgent political crisis in France weighs on EUR/USD
- US Dollar Rises on Expectations of Strong Labor Market Statistics
Buy the rumor, sell the fact. The strengthening of the interest rate is due to expectations of positive labor market statistics, the possibility of another relaxation of the interest rate in March fell to 45% and the demand for safe-haven assets in a changing world. Donald Trump does not rule out taking Greenland by force, while Denmark and the rest of Europe talk about the collapse of NATO and the United States could take control of approximately 30% of the world's oil reserves. This allows them to dictate rules to the market.
One way or another, Donald Trump wants to lower rates to 1%, which, given the rapid growth of GDP, contradicts economic theory. However, if the composition of the FOMC changes, anything would be possible. In this sense, the court's ruling in the Lisa Cook case is of fundamental importance. A precedent may be set that gives the president the power to remove members of the Federal Reserve.
Donald Trump intends to achieve a further slowdown in inflation. Why not capture the president of Venezuela to achieve this? Washington now demands that Caracas sell it 50 million barrels and cut all ties with Beijing, Moscow, Tehran and Havana. Deglobalization is intensifying and the world is becoming increasingly bipolar. In the short term, the dollar may benefit from the growing demand for safe haven assets.
The fall is also due to the vulnerability of the European economy. Following Italian and French inflation, consumer prices in Germany slowed in December from 2.6% to 2%. If the disinflation process gains momentum, the ECB could begin to consider the possibility of resuming its easing cycle, which is bearish for the euro.
According to Chancellor Friedrich Merz, some sectors of the German economy are in a critical situation and the government has not done enough in the eight months since he took office. The French Finance Ministry announced that the budget deficit would rise to 5.4% if parliament did not relent. As a result, risks of a credit rating downgrade increased and EUR/USD moved lower.
The strengthening of the US dollar caused a pullback. However, the precious metal remains in a strong position. This is partly due to the likely increase in central bank activity in the bullion market in a bipolar world.
He FxPro Analyst team
