The European Central Bank raised its main deposit rate by a quarter of one per cent to 4% today. That’s the highest level in the history of the euro. Economists are suggesting–maybe “hoping” would be a better word–that this will be the last interest rate increase in this cycle for the ECB. The latest increase comes as Euro Zone economies flirt with recession
Trick or trend: Will the Bank of Japan and the European Central Bank raise rates enough this week to slow the dollar? Nah!
The dollar is likely to get another boost from the Bank of Japan and the European Central Bank this week. On Thursday, the European Central Bank is likely to report its first interest-rate increase in more than a decade. But the increase is likely to be just 25 basis points. That will be a stark reminder of how far behind the Federal Reserve, which raised interest rates 75 basis points in June and is expected to increase rates by another 75 basis points at its July 27 meeting. On Thursday the Bank of Japan is expected to keep its benchmark interest rates at its current low, low, low level.
My one-hundred-and-fifty-fourth YouTube video “Strong Dollar Hits Stocks–3 Things to Do” went up today. The biggest factor driving falling prices in commodities (ahem, oil) is the rising strength of the dollar. Believe it or not, the US economy is faring better than other trading partners. That combined with rising interest rates makes for a stronger dollar. In this video, I provide three picks to address this issue as I continue to expect rate hikes from the Fed.
The Dollar Spot Index (DXY) fell by 0.7% today to the lowest level in more than two years on the biggest drop in almost four weeks.