US$ RIPS HIGHER AS DIVERGENCE RETURNS
Greenback hits 2018 high for third straight day against euro despite ECB chief’s relative optimism about euro-area growth
ARELATIVELY upbeat Mario Draghi did little to dent the dollar’s rip higher as investors refocused on the divergent United States and euro-area economies.
The greenback set a 2018 high for a third straight day even as the European Central Bank (ECB) chief said risks to euro-area growth remain “broadly balanced,” as he kept rates at zero.
That’s in contrast to the economic picture in the United States, said Citigroup Inc, given the strength of US leading indicators and the Federal Reserve’s commitment to hiking rates.
While ECB officials were “as optimistic as they could be”, that wasn’t enough to crimp the greenback’s strength, said Calvin Tse, Citigroup’s North American head of G-10 FX strategy.
“Investors have been wanting to buy the dollar on the back of data divergence,” said Tse.
“The better investment opportunities — high growth, high yields, a deep pool of liquid safe assets — in most scenarios, you want to be buying the US dollar.”
The dollar rose against most of its Group of 10 peers yesterday, with the Bloomberg Dollar Spot Index rising 0.1 per cent to the strongest level since June last year.
The euro fell 0.1 per cent to US$1.1366 (RM4.76), not far above its year-to-date low.
Investors will get their next update on the state of the US economy with yesterday’s third-quarter gross domestic product reading.
Growth likely cooled to a 3.3 per cent annual rate of expansion, a Bloomberg survey showed, from 4.2 per cent in the prior period.