USD appreciated sharply against Euro by 1% in 2 days (its best in last seven months) signaling strengthening of USD in context of the recent geo-political situation
Many things favoured this appreciation of USD of which three are more pertinent -
- one reversal of penal tariffs by Supreme Courts of US which lead to some stability in trade
- second return of safe haven status to USD aftermath of recent geo-political stress especially conflict in Iran and
- third with oil prices shooting up due to conflict, US will be mainly insulated as they have local supplies of oil but Euro zone will have to bear the brunt of price increases which means inflation and depreciation of their currency leading to strengthening of USD.
Question : Is this appreciation of USD sustainable, to me it seems to be yes considering the tensions and oil price jumps anticipated. But let us keep our fingers crossed and wait
No comments:
Post a Comment