The US dollar was generally stronger this morning as it embarked on what is likely to prove an uncertain year on foreign exchanges.
Political turbulence at home and economic problems internationally are expected to provide a challenging backdrop for the dollar’s performance on currency markets.
This morning, the currency was stronger against the and , but lower against the .
Modest rise against the euro
Across the last 12 months, the dollar has held reasonably steady against major currencies, despite the many difficulties of President Donald Trump’s administration. These include the loss of control of the House of Representatives, a series of high-profile departures from the White House and the prospect of Congressional inquiries into aspects of the Republican presidency.
During the last year, the dollar has moved within a band of about four euro-cents against the single currency, or about 4.5% of this morning’s exchange rate of €0.8738.
Against the yen, the dollar was 0.88% lower this morning, at 108.7550 yen. On 3 December the rate was 113.6500, and three months ago, on 2 October, it was 113.6650 yen.
On 2 January last year, the rate was 112.2900 yen.
The dollar has found support against the yen at about 106 yen and resistance at about 114 yen.
Its sterling exchange rate was up 0.25% this morning at £0.7862, while on 3 December it stood at £0.7858. On 2 October, the rate was £0.7704, while on January 2 last year the dollar was worth £0.7355.
Against the pound during the past year, it has found support at about £0.70 and resistance at about £0.78.
Downside risks “have risen”
In its latest Article IV health check for the American economy, the International Monetary Fund (IMF) noted in July last year: “Unemployment is low, inflation is well contained, and growth is set to accelerate. During the course of this administration, the economy is expected to enter the longest expansion in recorded US history.”
The dollar’s prospects do not exist in a vacuum, and its value will reflect in part the fortunes of the currencies against which it is traded. is the only monetary asset against which all currencies can, in theory, rise or fall at the same time, and here the dollar has depreciated during the last three months.
On 2 October, it cost $1,192.65 to buy an ounce of gold, but by 31 December the price was $1,281.65.
However, the performance during the past year has been more encouraging. On 2 January last year, gold traded at $1,312.80.