The euro is currently trading at the lowest level against the dollar since mid March 2015 when the euro plunged following the European Central Bank’s announcement about its 18 month quantitative easing bond buying program.
The euro is currently trading close to parity against the U.S. dollar and touched 1.054 on Friday before it bounced higher.
The U.S. dollar has shown considerable strength against the euro and a basket of other global currencies following the November 8th U.S. presidential election with currency traders expecting fiscal stimulus from a Trump administration in the form of infrastructure spending besides higher rates of interest and inflation.
A strong U.S. dollar helps the American consumer when purchasing goods overseas but it also hurts the exports of U.S. multi-national companies, corporate earning results, and other emerging economies that are pegged to the dollar.
The yield on 10 year U.S. Treasury has also swung higher since the November 8th election and touched 2.4170 percent on Friday, the highest level since July 13, 2015, as bond investors sell bonds and brace for a changing U.S. financial landscape alongside monetary tightening expectations from the U.S. Federal Reserve which is likely to raise interest rates at their next policy meeting in mid-December.
Higher yields on the 10 yr. Treasury eventually impacts borrowing costs of Americans with credit cards, as well as car and home loans.
The U.S. housing recovery has benefitted greatly from the U.S. Federal Reserve maintaining low interest rates since the Great Recession.
It remains to be seen whether the U.S. housing market is resilient enough and can keep expanding at the same pace in a climate of higher interest rates.
Recent U.S. housing data over the past week has been mixed.
On Tuesday reported existing home sales for October rose higher than market expectations and expanded 5.60 Million, outpacing the 5.40 Million consensus estimate from economists at briefing.com.
However, new home sales for October, released on Wednesday showed a growth rate of 563,000, below the consensus estimate of 587,000 from briefing.com and also lower than 574,000 in September.
Next week will be a busy week for investors as a deluge of data comes into focus varying from the 2nd estimate of Q3 U.S. GDP, PCE Inflation, the Fed’s preferred inflation gauge, consumer confidence (November) and the U.S. jobs report for November.
Also next Wednesday on November 30th OPEC will also hold a meeting in Vienna, Austria.