EUR/USD tumbles as Euro weakens on German political uncertainty,Trump's victory
EUR/USD posts a fresh four-month low near 1.0670 in Monday’s European session, the lowest level seen in more than four months. The major currency pair weakens as the election of Republican Donald Trump as US President has strengthened the US Dollar’s (USD) outlook in the long run. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, climbs above 105.30.
Trump vowed to raise import tariffs and lower taxes in his election campaign, which would add to United States (US) inflationary pressures and boost debt levels. According to a November 6-7 Reuters poll, 62% of respondents – including 94% of Democrats and 34% of Republicans – said that Trump's policies likely "will push the US national debt higher."
Trump's tax cut proposals could add $7.5 trillion to the nation's debt over the next decade, according to the nonpartisan Committee for a Responsible Federal Budget.
This week, investors will pay close attention to speeches from a slew of Federal Reserve (Fed) officials to get fresh cues about the likely monetary policy action in December. According to the CME FedWatch tool, there is a 65% chance that the central bank will cut interest rates again by 25 basis points (bps) to 4.25%-4.50% in December. This would be the second quarter-to-a-percent interest rate cut by the Fed in a row, as it also reduced its key borrowing rates last week.
On the economic front, investors will focus on the US Consumer Price Index (CPI) data for October, which will be published on Thursday. The impact of the inflation data is expected to be nominal on the interest rate outlook as Fed officials are confident about the disinflation trend towards the bank’s target of 2%. However, a significant deviation from the consensus could impact the same.(Cay)
Source: FXstreet
