The various publications on labor news in the US excited the market, despite the fact that the Fed minutes warned that the contractionary path would continue. Among the main data, non-agricultural payrolls stood out, which increased 223,000 jobs, exceeding estimates, but evidencing a decrease from the 263,000 jobs in November. In addition, wage growth was lower than expected, at 4.6% year-on-year against the estimated 5%, which could indicate a slowdown in inflation. Thus, the dollar index, which compares the US currency with a basket of currencies, consolidated the downward trend that began in November and today stands at 102.9 points, the lowest since June. Since it reached 114 points last September, the highest in 20 years, the indicator fell 9.7%. In contrast, the euro and the yuan, currencies of two of Argentina’s main trading partners that were weakened by the strengthening of the dollar in 2022, appreciated. Since November the euro index appreciated 5.4% and the yuan 6.3%. Nicolás Kohn, research wealth management analyst at Balanz, pointed out that “a good part of the weakening of the dollar globally is linked to the expectation of less adjustment in the Federal Reserve’s monetary policy. The dollar began to lose strength markedly after the positive surprises in the inflation data for October and November in the United States, in line with the lower pressure on interest rates. Additionally, higher-than-expected temperatures in Europe and a more comfortable energy reserve situation in the continent helped the euro against the dollar. The divergence in monetary policy between the US and Europe this year, with the Fed ending the tightening cycle most likely in March and the European Central Bank raising rates in the first half, should further support the euro at the expense of the dollar going forward. ”. In addition to the preliminary data indicating downward inflation that suggests a Fed pivot sooner rather than later, from Grupo Bull Market they highlighted that “little by little investors encouraged by an economic scenario that supported the tightening better than expected return to turn to risk. This weakens the dollar as a haven of value, which is the typical asset in times of panic.”
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