On Tuesday, the dollar showed strong performance due to several factors, most notably the political crises in France, which negatively affected the euro, along with weak economic data from China that pushed the yuan to its lowest levels in over a year.
The euro fell by 0.7% on Monday, settling at 1.0487 dollars. This decline came as a result of the acute political crisis facing France, and it’s worth noting that the euro was the weakest currency among the top ten currencies in November.
In China, a sharp decline in bond yields to record lows increased pressure on the yuan, causing it to trade at 7.2996 against the dollar, after being at 7.24 on Friday.
The Japanese yen reached its highest level since late October, hitting 149.09 against the dollar before slightly retreating to 150.15. Market confidence is growing regarding the Bank of Japan’s possibility of raising interest rates in December, with a 60% chance of a 25 basis points increase.
In the United States, improved manufacturing data boosted demand for the dollar, while markets await Friday’s job data to determine the Federal Reserve’s monetary policy direction. Despite the dollar usually facing annual pressure in December due to increased demand for foreign currencies, the ongoing political and economic uncertainty keeps it in a strong position.
Meanwhile, the Australian dollar dropped by 0.7% to 0.6472 dollars due to a higher-than-expected current account deficit, despite increased government spending that could support growth. The New Zealand dollar also fell slightly to 0.5876 dollars.
Analysts expect the dollar to maintain a strong position given the current economic and political conditions, with continued volatility in other currencies due to global geopolitical and economic factors.
