the dollar fell against a basket of major currencies last week as a series of different economic indicators failed and the Dover board slightly influenced the markets. While the dollar started the week at 93.709, it ended low at 92.782.
The euro started the week down with reports from Germany indicating the collapse of coalition talks. But the euro managed to rise again as traders ignored any concerns about political uncertainty in Germany. The euro, after receiving support from strong data for the entire euro zone purchasing managers' index over the weekend, managed to rise against the weak dollar and hit a two-month high of 1.1944 before ending the week at 1.1930.
The pound was also able to take advantage of the dollar's decline and started the week at 1.3216 and managed to reach a high of 1.3359 during trading. Weekend gains led to the pound ending the week at 1.3335, reaching a weekly high of 1%.
The Japanese yen followed a similar path as it rallied against the dollar. The dollar fell to its lowest level in two months as US economic indicators failed to support the dollar. After the dollar started the week against the yen at 112.08, it ended at 111.53.
German elections
In Europe, the German elections in September painted the local political landscape for a series of events that are rarely encountered. Small marginal parties, especially the pro-EU "Alternative to Germany" party, have pressed the main mainstream parties. Instead of the usual four or five parties, seven parties are currently represented in an unusually fragmented parliament.
As a result, the path towards the formation of the new government was stark. Chancellor Angela Merkel and her Christian Democrats are now facing three unpopular options after talks collapsed to form a government coalition with free and green Democrats. The first option is the formation of a minority government, which will be the first ever in the history of contemporary Germany, and will require working with other parties on the basis of a specific purpose in order to pass legislation. But Merkel has not indicated interest in this option, saying a minority government can not give Germany the stable government it needs. Instead, the Christian Democratic Party can revive its alliance with the Social Democratic Party since the two parties have ruled together since 2013. But the presence of this party with Merkel has hurt him, and has reduced his share of the vote to its lowest level ever, which Pushed the party to reject the coalition and favor its presence as an opponent to revive itself, even if they own more than 50% of the votes in the House together.
Finally, the option of new elections remains. But although the Fed president has the right to call for new elections, he does not want to. President Steinmeier fears that marginal parties may get more votes in new elections, which will destabilize an already sensitive situation and create Germany for something that has enough of it - more political uncertainty. This comes at a sensitive time for Europe, where a strong Germany is needed in its negotiations over Britain's exit from the EU and its path to recovery.
Different US economic indicators
Existing US home sales rose 2% month-on-month in October to 5.48 million units after seasonally adjusted year-on-year, surpassing market expectations as the impact of hurricanes began to decline. But the continuing shortage of housing remains an obstacle to raising prices. Meanwhile, the September sales after the review were reduced from 5.39 to 5.37 million units.
Last week, Durable Goods figures were also released as the basis for measuring the change in the total value of new orders for manufacturers of durable goods. The figure, a basis for production, unexpectedly fell in October after three straight months of strong gains, but a sustained rise in shipments indicated strong corporate investment and strong economic momentum as the year drew to a close.
On the other hand, data released on Wednesday showed a decline in the number of Americans applying for unemployment benefits, the prospects for the US economy. Strong corporate investment and tight labor market conditions will be used as ammunition if the Federal Reserve remains on course to raise interest rates as planned.
In addition, the Chicago Board of National Activity Index also exceeded market expectations, rising from 0.36 in September to 0.65 in October. The Chicago Reserve Board index is a composite index that includes at least 85 economic indicators across America.
European Central Lecturer
Last week, the minutes of the European Central Bank meeting were published in October, as the bank decided to keep interest rates unchanged at 0% and kept the door open for extending the post-September quantitative easing program or raising purchases if needed. The minutes showed a split among officials about the announcement of the end date of quantitative easing. In addition, officials did not agree to any extension or reduction after September 2018. In fact, some policy makers at the ECB were opposed to leaving the quantitative easing program with no final date, warning that this might make investors believe the program will be extended again. Markets will look for signs of quantitative easing, as this will signal the beginning of higher interest rates in the euro .
Purchasing Managers' Indexes in Europe
Factories across Europe have seen the most productive months since September 2011, with the momentum likely to continue in October as demand accelerates. In Germany, growth accelerated in November due to higher manufacturing performance. At the same time in France, the rise in production remained inclusive in manufacturing and services. "The message from the latest euro zone purchasing managers' index is clear: the business sector is booming," said Chris Williamson, head of corporate economics at IHS Markit, who is preparing the report. Growth rose in November to put the region on a better quarter-year path since the beginning of 2011. The PMI has so far recorded a 0.8% rise in GDP in the last quarter of 2017, ending the best year in 10 years.
Reserve Board of Australia
The Australian dollar fell after a cautious monetary policy meeting from the Reserve Board of Australia. At its meeting on November 7, the council said there was "very little uncertainty" about the possible end to the pressure and timing of low wages.
In addition, the Board warned that consumption growth will likely decline in the third quarter of the year. While exports and employment are strong, Australians under huge debt need higher wages to stimulate consumption and raise prices.
