World USD price reaches 13-month high

The US presidential election results and turmoil in Europe helped the US dollar gain 3% this month, reaching its highest level since late last year.

The Dollar Index - which measures the greenback's strength against a basket of major currencies - rose 0.06% to 107.04 on the morning of November 22. This is the highest level since October 2023.

The dollar has risen 3% since the beginning of the month, as markets expect President-elect Donald Trump’s policies to stoke inflation and make it harder for the Federal Reserve to cut interest rates aggressively. Recent comments from Fed officials, including Chairman Jerome Powell, have suggested the agency could slow down its monetary easing.

The Dollar Index strengthened since early October and accelerated after the US presidential election. Chart: Market Watch

Investors are still assessing the possibility of a rate cut by the US Federal Reserve. Data on November 21 showed that the number of initial jobless claims in the US last week unexpectedly fell to a seven-month low. However, the time it took the unemployed to find a job increased, creating conditions for the Fed to cut interest rates next month.

"The catalyst now is obviously whether the Fed will ease next month," said Tony Sycamore, market analyst at IG.

According to the CME FedWatch tool, investors now see a 57.8% chance of the Fed cutting rates by another 25 basis points in December, down from 72.2% last week.

The euro fell to a 12-month low against the dollar yesterday, with 1 EUR trading for just 1.046 USD. Currently, 1 EUR is equivalent to 1.05 USD.

The single European currency has been one of the biggest losers from the dollar’s ​​post-election rally. Recent escalations in Russia-Ukraine tensions and political turmoil in Germany, Europe’s largest economy, have added to the pressure.

In contrast, the yen strengthened against the dollar this morning, with one US dollar now worth 154.2 yen. The reason is that Japan's inflation in October was still higher than the Bank of Japan's (BOJ) target of 2%. This will force the BOJ to continue raising interest rates next month.