On 13 August, 2019, at 7:55 am CET the US dollar exchange rate strengthened on the foreign exchange (Forex) market and according to the DXY (US Dollar Currency Index), which compares the US dollar (USD) with the other six major world currencies, was at the 97.55 level with the daily appreciation of + 0.18%.
The strengthening of the USD exchange rate on the Forex market vis-à-vis other world currencies has been largely caused by the fact that more and more investors are convinced that in October 2019 the United Kingdom will leave the European Union without an agreement. According to analysts, trade relations will be negatively affected, which might result in the economic downturn not only the in the UK, but also in the EU countries. Investment strategists indicate that investors expect a less stable exchange value of the euro (EUR) and its fall vis-à-vis other currencies and, in particular, against the US dollar (USD). Furthermore, these experts point out that the moderate fall in the value of the euro against the US dollar indicates that investors are already shifting focus to dollar stock investments portfolio.
As a result of this situation and the current investor sentiment, on 13 august, 2019, at 8:07 am CET, the global currency pair EUR/USD traded on the Forex market at the exchange rate of US$ 1.119 per EUR with the daily appreciation of the USD by + 0.20% against the EUR. At the same time, the GBP/USD pair traded at the mutual exchange rate of US$ 1.2057 per GBP, with a daily USD appreciation of + 0.13% against the GBP. The British pound (GBP) and the euro (EUR) exchange rate was in the decline business trend of the single European currency by – 0.04% against the GBP with GBP 0.9279 per EUR. According to analysts, the exchange rate implies that the exit of Great Britain from the EU could harm the European economy of the EU countries even more than expected.
Thanks to the global geopolitical and especially economic situation, on 13 August, 2019 the US dollar recorded an increase in the investment demand and strengthened investors’ confidence on the global financial market despite strongly negative estimates of the US budget deficit data. The US budget deficit increased by US$ 119.7 billion, which is an increase of 27% compared to 2018. According to Wall Street estimates the monthly increase was fully in line with expectations and was largely due to increased spending on healthcare and the military. Medicare spending increased by 11% to US$ 66 billion, and defense spending also increased by US$ 10 billion to US$ 53 billion.
In the long-term investment horizon, the exchange rate of the US dollar against other world currencies, is linked to the awaited presidential elections that will take place in the autumn of 2020. The American voter base, which is already divided, is already following the first debates of the presidential candidates. According to a survey conducted by CNBC economic correspondents, a combined 53% of small and medium-sized businesses want change and see the election as a referendum on Trump. The USD exchange rate will be influenced by the outcome of the general election in the US with the regard to a possible global recession.