Solid Gold Berjangka – The euro weakened back below the US$1.12 level in trading on Friday (Nov 6), retreating from a one-month high. The pressure followed a global sell-off in technology stocks, which boosted demand for the US dollar as a safe-haven asset.
Sentiment toward artificial intelligence-related stocks soured after the Democratic Party's gains in the US Congressional elections sparked concerns over stricter regulation. This has heightened investor caution and strengthened demand for the dollar.
Meanwhile, the market continues to monitor the policy outlook of the European Central Bank (ECB). ECB President Christine Lagarde stated that the central bank would track economic data to determine whether an interest rate hike is necessary in December.
The ECB previously held its deposit rate at 2.5%. However, several European central bank officials have begun to signal the possibility of rate hikes, following an increase in Eurozone inflation to 4% in October—the highest level in three years.
Money markets currently anticipate two ECB rate hikes by mid-2027, with the first potentially occurring as early as December. While such expectations could provide support for the euro, the strengthening of the US dollar continues to limit the upside for the European single currency in the near term. (srh)