The U.S. currency gained against the euro and other currencies after expectations of aggressive interest rate cuts from the Fed faded.
He global dollar The stock market rose on Thursday after falling the previous day, as the market awaits a sustained fall and after US economic data eased fears of a risk of recession and curbed expectations of aggressive interest rate cuts by the US. Federal Reserve (Fed) of the United States.
He dollar index rose 0.42% against the currencies that make up the basket of currencies, around 103.03 units, moving away from the eight-month low of 102.15 touched last week. Meanwhile, the euro fell 0.36% against the greenback to $1.0973, leaving behind its highest level this year.
The pound meanwhile rose 0.17% to $1.2849 as data showed Britain’s economy grew 0.6% in the second quarter, in line with economists’ expectations and building on a quick 0.7% recovery in the first quarter of the year.
The yen traded at 149.13 per dollar, off a seven-month high of 141.675 hit during last week’s market chaos and well above a 38-year low of 161.96 hit in early July.
US economic data
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.
Added to this was the data from this Thursday that the retail sales U.S. interest rates rose more than expected in July, a sign that demand is not collapsing and that could prompt financial markets to reduce expectations of a 50 basis point rate cut next month.
Additionally, fewer Americans than expected applied for unemployment benefits. unemployment in the past week, suggesting that an orderly slowdown in the labor market is continuing, although laid-off workers are having some difficulty finding new jobs.
“This morning’s data contradicts the recent market narrative, which holds that the Federal Reserve is way behind schedule and would have to implement massive rate cuts to avoid a recession,” he said. Peter Vassallo, foreign exchange portfolio manager BNP Paribas Asset Management.
He added: “Market prices have adjusted accordingly and US short-term rates have risen significantly during the day.”
Source: Ambito
