Despite hitting a fourteen-year high in the end of 2016 following the election of Donald Trump, the dollar has been losing value since entering 2017. The dollar took a hit after minutes from the Federal Open Market Committee meeting this week revealed that members of the committee were not optimistic about a potential economic stimulus.
This news, combined with investors adopting a more cautious outlook of the economy following the excitement over Trump, assumed to be pro-market, has led to the dollar losing value against other currencies. Additionally, US labor data shows sluggish growth in the private sector, suggesting the economic boom investors were anticipating in December has become less realistic as we approach the inauguration.
Pound Benefits From Dollar's Hit, Euro Remains Steady
Following the ADP announcement that the US only created 153k jobs in December of 2016, rather than the anticipated 170k, the US dollar fell sharply. This in turn, however, led to GBP rising, moving to 1.24 against the dollar.
The Euro, however, maintained a steady performance today, and the pound's benefit from a weaker dollar did not spillover to its pairing with the Euro. The Euro was helped earlier this week following an announcement about Eurozone inflation hitting its highest level since 2013.
Economists warn, however, that despite the Euro's slight recovery this week, helped by inflation announcements and positive economic data, the current political unrest in Europe is unlikely to resolve anytime soon, and 2017 could be a potentially damaging year for the Euro.
