The pound went on a tear this Wednesday, rocketing higher against the euro and dollar to mark the currency’s best session for more than a month.
Cable shot up a remarkable 1.6% as the day progressed, clearing not only $1.41 but $1.42 in one fell swoop. Though the UK jobs report was decent, the highlight being another minor fall in unemployment, the thrust of cable’s growth is coming from the dollar’s bruised and battered start to 2018.
Despite ostensibly having the end of the US government shutdown to cheer about the dollar found little room for positivity this Wednesday, almost solely due to Treasury Secretary Steve Mnuchin’s appearance at the World Economic Forum in Davos. At a press conference Mnuchin argued that a weaker dollar was better for the US economy for trade reasons, a comment that was tantamount to kicking an already very sickly dog.
Combine that lack of policy support with a weaker than forecast US flash services PMI and a disappointing existing home sales number and the greenback gave up the ghost as the bell rang on Wall Street, plunging to a variety of fresh lows as it matched its sharp decline against the pound with a 0.8% drop against the euro and a 1% slide against the yen.
Of course these currency movements had major ramifications for the global indices. The Dow Jones was overjoyed at the dollar’s latest defeat, jumping 160 points to soar to a brand spanking new record peak of 26375. The European markets, on the other hand, shrank in the face of the pound and the euro. With sterling not only destroying the dollar but rising 0.8% against the euro the FTSE took the brunt of the blows, falling to a 3 week low after dropping 0.7%. The DAX and CAC, meanwhile, both slipped 0.3%, despite the euro’s 3 year high-hitting gains against the dollar being tempered by its losses against sterling.
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