The global dollar reached 4-week highs due to a possible maintenance of Fed rates

The global dollar reached 4-week highs due to a possible maintenance of Fed rates

The dollar index grows prior to the inflation data in the United States. The euro continues to be hit by the turbulence in France.

Photo: Reuters

He global dollar rose this Tuesday to its best level in four weeks while the euro traded at one-month lows weighed down by political concerns in Francewhile investors focused on the data from inflation from the United States and in the interest rate forecasts of the Federal Reserve (Fed).

He dollar indexwhich compares the greenback to a basket of six major currencies, rose 0.1% to 105.24 units, but was previously trading at 105.46, its highest level since May 14.

The euro fell 0.2% to $1.0742, its lowest level since May 2, pressured by investor fears that the advance of Eurosceptics in the European elections and the call for early elections in France may complicate the attempts of the European Union to deepen integration.

He dollarfor its part, was supported by the rise in Treasury bond yieldfollowing last Friday’s solid US employment data.

The monetary policy meeting of the Bank of Japan, which will conclude on Friday. Although investors expect a reduction in the entity’s monthly purchases of public debt, the large yield differentials with the United States have kept the and in On the defensive. In that sense, the dollar It showed little change at 157.03 yen.

Inflation data and projections, the keys of the week

“This week, inflation data in USA and the dot plot of the Fed (rate projections) will be the protagonists of the currency market,” said Athanasios Vamvakidis, of BofA. “The French elections are extremely important, but we have to see how they develop and, regardless of what the polls say, we will have to wait for the second round.”

For the moment, operators reduced expectations of a first rate cut in September, which now have a probability of 50%. However, there will be a key new piece of data this Wednesday, when the Labor Department releases Consumer Price Index (CPI) data, before the Fed concludes its two-day meeting.

“I think Fed members will take this data into account,” he said. Noel Dixon macroeconomic strategist at State Street Global Markets.

Source: Ambito

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