The euro’s feisty rally has further to run
The currency, and the euro zone’s economy more broadly, have been the success story in global markets in 2017, leaving the dollar bulls with egg on their faces
On Christmas Day, Europe’s single currency lost 3 per cent against the US dollar in a matter of minutes in a drop that was attributed to so-called “algo trading” – automated trades which have led to a number of inexplicable sudden and sharp declines in currencies known as “flash crashes”.
The euro quickly rebounded and, in a sign of the extent to which international investors remain bullish on the world’s second-most traded currency, analysts dismissed the slide as a computer-driven glitch in holiday trading.
That even a flash crash failed to ruffle the feathers of euro investors says much about the optimism surrounding Europe’s single currency since the victory of the pro-European Emmanuel Macron in France’s high-stakes presidential election last May.
The euro, and the euro zone’s economy more broadly, have been the success story in global markets in 2017.
Since mid-April, the euro has surged more than 12 per cent against the dollar and has been the best-performing currency in the G10 group of advanced economies this year.
Everything has gone the euro’s way in 2017, including the plunge in the dollar, with the dollar index (a gauge of the greenback’s performance against a basket of other currencies) down 9 per cent this year to its lowest level in nearly three years.