BLBG: Dollar Sees Record Winning Run Versus Euro on Trump Policy View
Rally over last two weeks pushes dollar to this year’s high
Draghi says euro-region recovery depends on monetary support
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The dollar held a nine-day advance against the euro, its longest winning streak since the shared currency’s debut in 1999.
The U.S. currency touched its strongest level in almost a year, driven by expectations for U.S. President-elect Donald Trump’s reflationary economic policies and a reinforced view that the Federal Reserve will raise interest rates in December. It has appreciated over the past two weeks as Treasury yields surged on speculation the new administration will boost spending.
Fed Chair Janet Yellen suggested Thursday the central bank remained on course to tighten policy. European Central Bank President Mario Draghi said the recovery in the euro-area economy depends on continued monetary support.
“The dollar is rampant,” said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA in London. “It’s just this assumption, and for now it still is an assumption, that the U.S. is going to reflate next year from fiscal policy. Yellen’s comments yesterday probably helped the dollar. The market just sees buying dollar as the trade to end the year with.”
The dollar was little changed at $1.0625 per euro as of 6:55 a.m. in New York, after touching $1.0582, the strongest level since Dec. 3. The U.S. currency was at 110.21 yen, on track for a two-week advance of 6.9 percent.
Foreign-exchange analysts have boosted their dollar-yen forecasts at the fastest pace in more than a year. Their median estimate is for the greenback to end 2017 at 110 yen.
The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, rose for a third day, climbing 0.1 percent and reaching the highest level since February. The gauge was set for a 1.5 percent increase this week.
“There is a sense of reassurance on the lack of official comments against the dollar strengthening,” said Michiyoshi Kato, senior vice president of foreign-currency sales at Mizuho Bank Ltd. in Tokyo. “The Trump magic is continuing. There are no factors yet to dampen that. Japanese exporters may sell to slow the rally, but dollar-buying momentum seems to be stronger.”
