© Reuters.
Por Peter Nurse
Investing.com – The dollar gains positions at the start of trading in Europe on Monday, gaining ground even against the euro despite Emmanuel Macron’s victory in the French presidential election, as traders see the asset as a safe haven.
At 9:05 AM ET, the , which tracks this currency against a basket of six other major currencies, was up 0.4% at 101.625, hitting levels last seen in late 2016.
French President Emmanuel Macron claimed an electoral victory over far-right rival Marine Le Pen on Sunday, giving the euro a small boost as the result provides stability within the European Union, preventing the rise of a deeply eurosceptic government.
However, the single currency’s rally has been short-lived as traders turn to the safety of the dollar amid uncertainty over global growth prospects as the US Federal Reserve tightens monetary policy.
“It’s been a good month for the dollar,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “Versus the euro and the yen, it is rising for the fourth consecutive month. The rate hike still looks like the main driver. The monetary policy divergence is evident.”
Federal Reserve Chairman Jerome Powell last week hinted at the possibility of a 50 basis point rate hike at the central bank’s next meeting in May, accelerating his monetary policy tightening after raising rates. by 25 basis points in March.
In contrast, Japan’s central bank has remained steadfast in its very accommodative stance, while Europe, and thus the euro, is more exposed to the stagflation forces stemming from the Ukraine war.
The International Monetary Fund has recently lowered its growth forecast for the eurozone for this year from 3.9% to 2.8%. The bloc will release its first estimate of Q1 GDP on Friday, and it is expected to have risen 0.3% on a quarterly basis.
The pair is down 0.4% to the 128.09 level, retreating from 20-year highs, with the dollar up around 11% against the yen so far this year.
The pair dipped 0.6% to 1.0727, posting a new two-year low after an initial opening higher.
Elsewhere, the pair is up 0.8% to 6.5518, posting fresh one-year highs, as the ongoing wave of COVID-19 raises concerns about the second-world economic growth prospects. World economy.
The Chinese capital, Beijing, has reported dozens of COVID-19 cases this weekend, raising fears of a strict and prolonged lockdown, similar to that of the financial center of Shanghai.
The pair is down 0.9% to 1.2732 as last week’s disappointing UK retail sales and consumer confidence data point to a possible slowdown in the Bank of England’s tightening cycle. .