- The euro and the dollar are trading at an almost one-to-one rate
- This also has impacts for UK investors
Big news last week as the euro and dollar reached parity, trading at a one-to-one rate. The last time this happened was over 20 years ago. And it marks a significant slide: this time last year, one euro would have got you almost $1.20.
This parity is a function of a very strong dollar and a pretty weak euro. And there are three key drivers of this. The first is that interest rates in the US are still significantly higher than in the eurozone, with another substantial US hike likely next week. This has seen investors rush to lock in higher short-term interest rates, increasing demand for the dollar.