He global dollar remained stable in the early hours of Thursday after having fallen the previous day due to inflation data in USA. This behavior was also reflected in the foreign exchange market. Uruguay, where the currency fell after two consecutive increases.
He dollar index remained relatively stable in relation to the currencies that make up the comparative currency basket, around 102.5 units, values that it had not reached since January of this year.
US consumer price index data rose moderately, in line with expectations, so the increase in inflation slowed to below 3%. While there is still room to reach the 2% target of the Federal Reserve (Fed)these levels had not been achieved since the beginning of 2021, so, together with the fear that the current path of monetary policy lead to a recession, The chances of the first interest rate cut occurring in September have strengthened, along with operators’ projections.
However, the slightly higher than expected price increase – if we add the increase in producer prices in July – led to the belief that the Fed will not be as aggressive in the cuts, which moderated the decline of the dollar.
The following data is the retail sales from the United States to be published this Thursday.
“Monetary easing is certainly getting closer, but the market is framing it in the context of what we saw early last week, when there was a big shift in expectations for the Federal Reserve”, He told Reuters Jane Foley, Head of FX Strategy Rabobank. “Rather than being excited at the prospect of action, some are disappointed that we did not get a 50 basis point cut,” he added.
Markets are now pricing in a 64% chance of a 25 basis point cut next month and a 36% chance of a 50 bp reduction, the tool showed. CME FedWatch. Traders were evenly split at the start of the week between the two cutback options following last week’s sell-off.
In Uruguay, the dollar cut two consecutive increases
In Uruguay, Meanwhile, the dollar fell 0.31% on Wednesday, closing at 40.269 pesos for the interbank quote. Central Bank (BCU), thus breaking two consecutive days of increases, but continuing in the 40 pesos range.
The US currency is practically at the level it closed in July, with a monthly decline of 0.01% and an annual variation of 3.20%, due to the fact that its price is 1.25 pesos above the one registered after the closing of the last exchange day of last year.
Source: Ambito
