US economy sways world currency markets



The US dollar is on a roll. The currency’s gains last month took the US Dollar Index near four-year highs.

The Dollar Index, a measure of the greenback’s value against a basket of currencies including the euro, the yen and the pound, appreciated more than 3.8 per cent in a month, which all but solidified the bull trend for the dollar and primed it for an even stronger closing through the end of this year.

In its third consecutive month of gains, the Dollar Index is approaching levels last reached in 2010, and technically a move towards 88.64 will be next up for the currency. The dollar has been a big beneficiary of the one-way downwards move in the euro, which was further exacerbated last month, but the improved sentiment about the US economic situation continues to build momentum and this is converting into increased flows into dollar-long positions.

Amid a stellar US economic calendar last month filled with stronger-than-expected numbers, perhaps the key figure was the headline US nonfarm payroll report. The most recent data showed that 248,000 new jobs were added in September, well above expectations of 215,000.

The key takeaway from the report was the unemployment rate, which dropped to 5.9 per cent, below an expected 6.1 per cent and the lowest since July 2008. The improved figure caused large inflows into dollar-long positions (the Dollar Index gained more than 1.2 per cent on Friday) as the data further solidified the US recovery and increased bets that the Federal Reserve would look at increasing rates sooner rather than later.

Estimates have the Fed poised to increase US interest rates in July next year, but the US data docket showing signs of improvement leads to increased speculation of a rate hike sooner than expected – and this expected interest rate differential leads to an increased demand for the currency with the higher interest rate, in this case the dollar. With the European Central Bank in the midst of aggressively cutting rates, the euro-dollar pair is susceptible to further downsides through the medium term.

The euro’s torrid run continued through last month, with the common currency slipping 3.85 per cent against the dollar and 1.6 per cent against the British pound. The euro-dollar conclusively took out our target support at 1.28 to close just above 1.25 levels.

Technically, we predict the euro-dollar testing the 200 Month Average, which sits at 1.2214 in the month ahead, and with the current condition of the European data docket we fully expect this target to materialise.

The ECB president, Mario Draghi, last month slashed rates across the board. The main refinancing rate was cut to 0.05 per cent from a previous 0.15 per cent, the deposit facility rate was cut to minus 0.20 per cent from minus 0.10 per cent and the marginal lending facility rate was cut to 0.3 per cent from 0.4 per cent.

Although the ECB could not cut rates any further at its latest meeting last Thursday, Mr Draghi hinted at further asset purchases in the region of €1 trillion. The potential for such an increase in the ECB’s balance sheet will no doubt continue to pile the pressure on the euro, and with the data coming out of Europe showing no signs of improvement, it is not a matter of if but when Mr Draghi will pull the trigger.

The fundamental drag of upcoming ECB action will no doubt test 1.22 in the euro-dollar cross, and looking ahead to the closing months of the year this could open the door to a break of 1.20 levels. We still expect the cross to hold above 1.18 for the rest of the year.

Along with the euro, a stronger dollar will also lead to further downsides in the pound, the Australian dollar and gold in the month ahead.

The Scottish vote was a make or break for British pound forecasts, and although the No vote made the pound-dollar rally initially to 1.65 levels, a weaker second half of last month caused the cross to close below 1.60 for the first time in 11 months. The Australian dollar moved to its lowest level this year, and deteriorating sentiment from China will continue to weigh down Aussie-US dollar forecasts. The Australian dollar gave up more than 6.2 per cent against the greenback last month and we expect the weakness to continue in the month ahead with a test of 0.83 on tap.

And finally, gold is consolidating around a key support level of US$1,180 an ounce. Despite the recent bear trend in the precious metal, we expect these levels to hold in the month ahead while stabilising in the current range to close out the year.

Gaurav Kashyap is the head of futures at Alpari Middle East

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Our Time Has Come
Alyssa Ayres, Oxford University Press

The specs: 2018 Renault Koleos

Price, base: From Dh77,900
Engine: 2.5L, in-line four-cylinder
Transmission: Continuously variable transmission
Power: 170hp @ 6,000rpm
Torque: 233Nm @ 4,000rpm
Fuel economy, combined: 8.3L / 100km

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THE BIO

Born: Mukalla, Yemen, 1979

Education: UAE University, Al Ain

Family: Married with two daughters: Asayel, 7, and Sara, 6

Favourite piece of music: Horse Dance by Naseer Shamma

Favourite book: Science and geology

Favourite place to travel to: Washington DC

Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.

Normcore explained

Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.

Other workplace saving schemes
  • The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
  • Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
  • National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
  • In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
  • Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
SPEC%20SHEET%3A%20APPLE%20M3%20MACBOOK%20AIR%20(13%22)
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JOKE'S%20ON%20YOU
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Emergency

Director: Kangana Ranaut

Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry 

Rating: 2/5

ANDROID%20VERSION%20NAMES%2C%20IN%20ORDER
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BACK%20TO%20ALEXANDRIA
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Game Changer

Director: Shankar 

Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram

Rating: 2/5

The biog

Name: Fareed Lafta

Age: 40

From: Baghdad, Iraq

Mission: Promote world peace

Favourite poet: Al Mutanabbi

Role models: His parents 

THE SPECS

Engine: 6.75-litre twin-turbocharged V12 petrol engine 

Power: 420kW

Torque: 780Nm

Transmission: 8-speed automatic

Price: From Dh1,350,000

On sale: Available for preorder now

Living in...

This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home. 

THREE
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Founders: Ines Mena, Claudia Ribas, Simona Agolini, Nourhan Hassan and Therese Hundt

Date started: January 2017, app launched November 2017

Based: Dubai, UAE

Sector: Private/Retail/Leisure

Number of Employees: 18 employees, including full-time and flexible workers

Funding stage and size: Seed round completed Q4 2019 - $1m raised

Funders: Oman Technology Fund, 500 Startups, Vision Ventures, Seedstars, Mindshift Capital, Delta Partners Ventures, with support from the OQAL Angel Investor Network and UAE Business Angels

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
The%20specs
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RedCrow Intelligence Company Profile

Started: 2016

Founders: Hussein Nasser Eddin, Laila Akel, Tayeb Akel 

Based: Ramallah, Palestine

Sector: Technology, Security

# of staff: 13

Investment: $745,000

Investors: Palestine’s Ibtikar Fund, Abu Dhabi’s Gothams and angel investors

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY%20PROFILE
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The%20specs
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Padmaavat

Director: Sanjay Leela Bhansali

Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh

3.5/5

Stamp duty timeline

December 2014: Former UK finance minister George Osbourne reforms stamp duty, replacing the slab system with a blended rate scheme, with the top rate increasing to 12 per cent from 10 per cent:
Up to £125,000 - 0%; £125,000 to £250,000 – 2%; £250,000 to £925,000 – 5%; £925,000 to £1.5m: 10%; Over £1.5m – 12%

April 2016: New 3% surcharge applied to any buy-to-let properties or additional homes purchased.

July 2020: Rishi Sunak unveils SDLT holiday, with no tax to pay on the first £500,000, with buyers saving up to £15,000.

March 2021: Mr Sunak decides the fate of SDLT holiday at his March 3 budget, with expectations he will extend the perk unti June.

April 2021: 2% SDLT surcharge added to property transactions made by overseas buyers.

The specs: 2018 Chevrolet Trailblazer

Price, base / as tested Dh99,000 / Dh132,000

Engine 3.6L V6

Transmission: Six-speed automatic

Power 275hp @ 6,000rpm

Torque 350Nm @ 3,700rpm

Fuel economy combined 12.2L / 100km

How to avoid crypto fraud
  • Use unique usernames and passwords while enabling multi-factor authentication.
  • Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
  • Avoid suspicious social media ads promoting fraudulent schemes.
  • Only invest in crypto projects that you fully understand.
  • Critically assess whether a project’s promises or returns seem too good to be true.
  • Only use reputable platforms that have a track record of strong regulatory compliance.
  • Store funds in hardware wallets as opposed to online exchanges.
How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

The specs

AT4 Ultimate, as tested

Engine: 6.2-litre V8

Power: 420hp

Torque: 623Nm

Transmission: 10-speed automatic

Price: From Dh330,800 (Elevation: Dh236,400; AT4: Dh286,800; Denali: Dh345,800)

On sale: Now