In a climb that has not been seen in the market in the recent past, the dollar has climbed to the highest level since 2003 against the euro while gold jumped marking the beginning of steeper prospect for the U.S. interest rates. There has also been a rebound in the U.S. stocks observed from the worst day in two months thanks to the Trump effect.
The U.S. 10-year yields have reached an all-time high that has not been seen in the last two years. Consequently, this has led the rate-sensitive stocks to slip while financial shares led gains in major American equity benchmarks.
Following the Federal Reserve’s first interest-rate hike of 2016 which signaled three increases in the coming year, the greenback extended its advance on emerging and major-market peers. There has been a 2.6 percent fall in Gold to a 10-month low, this has led to what some call a shift away from global central-bank policy that’s dominating the market, into a potential rise in economical spur.
Donald Trump’s victory in the presidential election has fueled the fall in bonds while stocks have rallied. However, the dollar has been surging since the U.S. central bank stands largely alone in tightening policy. Following the European Central Bank’s move to extend the quantitative easing, the Bank of England has kept its key rate at a record low.
In a statement made by the head of Group-of-10 currency strategy at Banco Santander SA in London, Stuart Bennett, the current situation in the market feels like going long dollar is free money. He added that the market believes it can push for another two to three percent risk free in what appears to be a Christmas bonus.
In a surge that has not been seen since January 2003, the dollar gained 1.1 percent to $1.04242 per euro as it advanced 1.4 percent against the Yen. The median estimates of economists were matched back in November following the 0.2 percent increase in consumer prices.