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The global dollar feeds on political instability in Europe

The global dollar feeds on political instability in Europe
The global dollar feeds on political instability in Europe

He dollar was trading stable on Monday, while the euro was trading around more than a month’s lows, as political unrest in Europe The level of uncertainty among traders increased, while investors waited for more data to gauge the strength of the US economy.

Investors have been contemplating the risk of a budget crisis in the heart of the euro zone, as far-right and left-wing parties gain momentum ahead of France’s snap parliamentary elections, putting pressure on the president’s centrist government. Emmanuel Macron.

Even after French financial markets suffered a brutal sell-off late last week, French policymakers central bank European Union have no plans to discuss emergency purchases of French bonds, five sources told Reuters.

He euro It was trading stable at $1.0713, after falling on Friday to its lowest level since May 1, at $1.06678. In addition, last week it recorded its largest weekly drop since April, 0.88%.

He dollar index, which compares the US currency with a basket of six other currencies, was trading unchanged at 105.54, near its highest level since May 2, driven mainly by the weakness of the euro.

The president of the Minneapolis Federal Reserve Bank, Neel Kashkari, He said on Sunday that it was a “reasonable prediction” that the US central bank would cut interest rates once this year and wait until December to do so.

The Fed released updated projections last week showing that the median forecast among 19 U.S. central bankers was for a single interest rate cut this year.

The dollar in Uruguay consolidates at $39

He dollar fell 0.06% on Friday compared to Thursday and closed at 39,256 pesos, according to the price of the Central Bank of Uruguay (BCU), marking its fourth consecutive weekly increase and consolidating itself in the range of 39 pesos.

The US currency thus operated contrary to what happened internationally, with a global dollar which was appreciated before the fall of the euro, due to concerns that a new government will worsen the fiscal situation of France.

After the slight drop this Friday, the dollar It remains in positive territory so far this year, with an improvement of 0.60% compared to the end of 2023, indicating that the greenback could recover some of its value.

Furthermore, in the monthly accumulated, the currency reached an appreciation of 1.20% in the first two weeks of the month and, if this trend continues, it would close its third month on the rise, after the increases of 1.24% in May and of 2.04% in April.

However, looking ahead, the financial advisor of Balanz Uruguay, Alan Babic, He explained days ago to Ambit that “great volatility is not expected” in the exchange rate, when asked about movements after the decision of the Federal Reserve (Fed) to keep rates high for longer.

In fact, he considered that the value of dollar It does not have as much connection with what the Fed defines as with the factor that “competitiveness in Brazil”.

Source: Ambito

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