FOREX-EUROPE-USA- EURO-DOLLAR-ILLUSTRATION

The U.S. dollar continues to roll as it is close to hitting a 14-year high and continues to tramples other currencies last Thursday’s closing. The steep growth the dollar continues to experience is due to the more aggressive Federal Reserve and its decision to raise the interest rates accompanied by the surprise boost in the U.S. economic under President-elect Donald Trump.

Reports from the dollar index track the greenback’s growth of a 14-year high of 103.560 against six other major currencies and also revealed that it was the biggest daily percentage gain in nearly six months. The surge the dollar gets puts the euro in a same 14-year high and an almost 10-1/2 month high against Chinese’s yen.

Some notable agents that helped the dollar climbed are, the Fed’s decision to raise the interest rates after a year of idleness and are likely to triple in 2017, the fiscal stimulus brought by the infrastructural spending, and the expectations of Trump administration’s economic plans. The financial markets are expecting an increase of 25 basis points but the rates might likely to rise at a faster pace than expected pace and possibly surprise investors and continues to fuel the dollar in its way up last Thursday.

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Dollar Nears Parity against Euro

Another underlying effect of the surging dollar is the next to parity to its close competitor, the euro. After a bullish two-year market in the U.S., the dollar is seeing a much long-awaited milestone at it sees to close a 1-1 exchange ratio between euros, this is the closest it got after the 2014’s $1.40 per euro.

A report after Thursday’s closing bring euro to a decline of around 6 percent at $1.0411 and is having a year on the setback of 4 percent this year. The economist also surveyed that in late November, the euro will be trading at $1.05 by the end of February, and the report didn’t include the recent decision of the Fed in increasing its rates. Also, according to currency strategist from Citigroup and the Deutsche Bank, the world’s top two largest currency dealer, said the parity might be sooner than later.

According to the French multinational banking and financial services company Societe Generale, euro can see a silver lining just before the year ends and can recover at $1.09 just before the year ends and sees it dwindle down at $1.00 just before the end of the first quarter. According to another global financial firm UBS, in its 2017 market outlook this week that it expects the euro to reach $1.20 in the 12 months.

Chief economist Tim Hooper of TIAA Global Asset Management said the gains in the U.S. dollar should be limited as other currencies find support from the spread of gov’t stimulus to other regions such as Europe. And Hooper added that the steady increased fiscal spending in Europe will eventually affect and support the euro as well.

Among other currencies, the dollar hits a high of 0.9 percent as opposed to yen at 118.11 yen after the gigantic increase of as much as 1.4 percent to 118.66 yen the highest since last February. Against Swiss francs, the dollar inched 1.0344 percent, the highest since August 2010.

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