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Euro strengthens against the dollar

Credit: © Belga

The euro on Friday reached its highest rate since the beginning of July against a dollar weakened by the prospect of a new lowering of interest rates in the United States.

About 9.45 am GMT (10.45 Belgian time), the euro gained 0.47% against the greenback, reaching $1.1290, a rate not seen since last summer.

“It’s hardly surprising,” Ulrich Leuchtmann, an analyst at Commerzbank, commented. He explains that “the president and CEO of the Federal Reserve Bank of Dallas, Robert Kaplan, has already given strong indications he would like to see a lowering of rates in the near future.”

“Considering the speed at which (the virus) is spreading (…) (it is necessary) to take some bolder decisions, and to do so sooner rather than later,” Kaplan, who runs one of the 12 regional banks making up the US Federal Reserve Bank (Fed), stated on Thursday.

In the face of the epidemic, the Fed lowered its rates by half a percentage point on Tuesday.

A lowering of the Fed’s rates supports the economy through growth but makes the dollar less profitable and therefore less attractive to currency traders.

On Thursday, the coronavirus had infected over 180 people in the US and caused eleven deaths. The American figures are however much lower than those recorded in the European Union, where several thousand people have been affected and more than 150 have died.

However, the European Central Bank’s monetary policy – already ultra-easy – leaves it less room to manoeuvre than the Fed.

The Brussels Times