The US dollar jumped overnight as markets looking forward to raise interest rates at the December meeting for the fourth time this year. Although the dollar index, which measures the value of the currency versus six major currencies, declined with the initial reaction to the FOMC's November meeting minutes on November 7 and 8, it was able to quickly rose to 96.95 levels.
What made the markets ready to make such a decision was to show all members of the bank that they agreed to raise rates again until they were close to the desired range. The greenback rose with the Federal Reserve's indication that further rate hikes would be consistent with the continued expansion of economic activity and the growth of the labor market at a strong pace. However, there are some pressures on the economy, which are the potential negative effects of economic and financial developments abroad.
On the other hand, the Group of G20 summit in Argentina kicked off today, which is scheduled to last for two days. The summit is likely to turn investors' attention to any developments in the trade dispute between US President Donald Trump and his Chinese counterpart, with the first hinting that he hopes to lay the foundation for a trade deal with China or move forward with new tariffs.
Trump also planned to meet with his Russian counterpart Putin, but was abruptly canceled as the conflict between Russia and Ukraine escalated and is expected to be discussed with G20 leaders.
Finally, euro zone inflation data released this morning, which slowed significantly to make us believe that the ECB will follow a cautious approach when exiting the monetary easing program. Consumer prices rose 2.0% YOY in November after rising by 2.2% previously.
The European Central Bank is still planning to end its 2.6 trillion euro bond purchase plan next month, saying inflation is now on track and the euro-zone economy will continue to expand in the coming period. But even if the bank ends its bond buying program at its next meeting, it is expected to be forced to keep interest rates at historic lows for some time to maintain financial and economic stability.
