Expectations of a quick Fed rate cut fall and the dollar gains momentum

Expectations of a quick Fed rate cut fall and the dollar gains momentum

He dollar At a global level, it is going through a positive week in parallel with the expectations of operators for a rapid cut in interest rates by the United States Federal Reserve (Fed) They continue to cool. In Uruguay, meanwhile, the local exchange market It reflects international behavior and is close to the projected values.

On Thursday the global dollar rose for the fifth consecutive day after the data from the US labor market was released, which confirmed employment growth and gave further support to the idea that the Fed is in no rush to lower benchmark interest rates, which are at their all-time high.

Close to marking its second consecutive week of gains, the dollar index It rose 0.14% yesterday to 103.47 units, after reaching 103.69 units on Wednesday for the first time since December 13.

At the same time, the optimism of operators for a more aggressive approach at the beginning of the cycle of rate cuts is increasingly less: projections of a reduction of at least 25 basis points in March are located at 57.1 %, depending on the tool FedWatch of CMEwhile last week they were 73.2%.

“The message from US activity data and central bankers is that markets are too aggressive about rate cuts in 2024, both in timing and magnitude,” he told Reuters. Richard Franulovichof Westpac. “That, and a new episode of turbulence in China’s real estate and financial markets, make the dollar return to normal,” he added.

For their part, authorities of the Fed like the governor Christopher Waller They suggested that the speed and timing of the cuts will be slower than the market had initially anticipated, which suggests that the dollar will remain stable in its bullish behavior for a while longer, as long as economic data accompany this new status quo.

In Uruguay, the dollar accompanies the rise

In Uruguay, Meanwhile, the US currency rose for the third consecutive day, registering 0.17% more than on Wednesday.

In this way, and according to official data from the Central Bank of Uruguay (BCU)he dollar It closed at 39,348 pesos. Although this value is still far from market expectations – which by the end of 2023 predicted a price of 39.5 pesos per dollar – the mostly positive behavior of the currency so far this year seems to point to a certain correction. of the exchange rate delay.

In any case, analysts predict that 2024 will be a year marked by the weakness of the dollar at a global level, so the 0.84% ​​appreciation that has occurred during the month locally may not be the predominant trend in the following months.

Source: Ambito

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