The Euro’s Rollercoaster Ride vs the US Dollar
Friday saw the euro give the dollar a quick, 0.16% push, peaking at 1.10400 around 2:10 p.m. GMT. The high was short‑lived, however: after a brief climb the euro slid back, leaving traders scratching their heads and investors watching the charts nervously.
What Made the Dollar Dip?
All this drama started when fresh American economic news hit the market. The initial data seemed to put the dollar on a downward slope, but it quickly corrected itself.
Core PCE – The Mildly Mild Indicator
- The core Personal Consumption Expenditures (PCE) index, which strips out food and energy, rose by 3.2% YoY in November last year – a little shy of the 3.3% forecasted.
- This June‑2022‑level figure is the slowest expansion since April 2021.
- Month‑over‑month, it ticked up 0.1% versus the anticipated 0.2%. Not exactly fireworks.
Durable Goods – The Unexpected Upswing
- Orders for core durable goods jumped 0.5%, beating the 0.2% expectation and reversing a previous ‑0.3% contraction.
- Growth resurged in key sectors: computers, communication equipment, electronics, and non‑defense capital goods.
Bond Yields – The Euro’s Kryptonite
In the bond markets, U.S. Treasury yields nudged up, with ten‑year bonds climbing to 3.884% after having hovered near 3.848%—close to the year’s low seen in July. The rise added a bit of pressure on the euro.
German Bunds also dipped to 1.950%, the closest they’ve got to a mid‑March low. With Bund yields on track to stay negative for another week, the Euro faces a double‑whammy of credit‑market pressures.
The Bottom Line
Short story: a modest core PCE reading, a pleasantly surprised durable‑goods uptick, and a bond‑yield hike have combined to sabotage the euro’s fleeting high. It’s a textbook case of how markets love a good story but still love to keep everything unpredictable.
