The US dollar weakened on Thursday after a strong election-driven rally on Wednesday. The dollar index, which describes the development of the dollar against key currencies, had fallen by 0.5 percent to 104.5 points.
In the United States, interest rates on government bonds were gently falling, but in Europe, interest rates were mainly on the rise.
Interest rates rose rapidly in the United States yesterday, as the election result began to be confirmed. Investors expect that the stimulative fiscal policy pursued by Republican Donald Trump will accelerate inflation.
On Thursday, the interest rate on the two-year US government bond had fallen 3.9 basis points to 4.222 percent, while the ten-year bond had fallen 2.9 basis points to 4.404 percent.
In Germany, interest rates went in the other direction. The interest rate on the two-year loan had risen by 3.3 percentage points to 2.202 percent, while the ten-year one had risen by 4.8 percentage points to 2.450 percent.
The market’s expectations about the direction of the central bank Fed’s monetary policy also changed slightly with the election result. Even before the election on Monday, the market expected that the Fed would cut its key interest rate by 25 basis points at the December meeting with an 83 percent probability, while now the probability was only 69 percent.
In Europe, the changes have been smaller. At the beginning of the week, the market considered one cut of 25 interest points certain, and another cut was given a 19 percent probability at the next meeting in December. Now the probability of another cut by the European Central Bank ECB is 16 percent.
Statistics on new unemployment compensation applications were received at half past four. There were no surprises in the figures. 221,000 new applications were received, while the consensus of economist forecasts collected by the news agency Bloomberg expected 222,000 applications. According to revised figures, 218,000 applications were received in the previous week.
Source: www.arvopaperi.fi
