The dollar confidently holds near the 19-month high. Currency is spurred on by large volumes of purchases, as increased concerns about a slowdown in the global economy have reduced the appetite for riskier assets, such as stocks and Asian currencies.
The weaker-than-expected economic data from China and Europe, and fears of a possible suspension of the US government, scared investors off stocks, raising demand for the dollar and the yen. The dollar will always be attractive during times of market stress. In addition to fears of a slowdown in the global economy, markets also focus on US monetary policy. The Fed is likely to raise interest rates by 25 basis points on Tuesday. Since December 2015, the Central Bank raised rates eight times, seeking to normalize its policy, after it reduced borrowing costs to almost zero to combat the financial crisis ten years ago. So the dollar will be guided by the decision of the Fed.
As for the year 2019, three more rate hikes were predicted back in September. However, now only one is expected. There is reason to believe that higher borrowing costs will reduce the growth dynamics in the United States and ultimately force the Fed to suspend monetary tightening.
In the meantime, the dollar feels and will feel great. The American rose even in relation to the yen, by 0.1 percent, the difference in interest rates between the United States and Japan makes it more attractive compared to the Japanese currency. At the same time in December, the Central Bank of Japan is likely to keep its policy unchanged, which means the gap will become even larger.
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