He global dollar rose on Wednesday after falling to its lowest level against the euro this year, as investors await revisions to employment data USA and a speech by the president of the Federal Reserve, Jerome Powell; Meanwhile, in Uruguay, rose 0.04% on Tuesday compared to the previous day and closed at 40.261 pesos.
The euro rose to $1.1132, its highest level since December, as investors increased their bets on Fed rate cuts. Fed this year, dragging down US bond yields and weighing on the dollar. Finally, the euro fell 0.1% to $1.1119 as the dollar found its footing.
Some analysts have attributed the falling yieldswhich makes US bonds less attractive and weighs on the dollar, to persistent concerns about the economy and nervousness over the revision of US non-farm payrolls data.
The Bureau of Labor Statistics will release revised figures for the April 2023 to March 2024 numbers later on Wednesday, using fiscal data.
“With inflation slowly converging towards target, financial markets are increasingly sensitive to recession concerns and therefore a downward revision of the employment figures could trigger another bout of risk aversion,” said Michiel Tukker, senior European rates strategist at ING bank.
Eye on the Fed
A weak payrolls report on August 2 sent traders rushing to price in the prospect that the Fed need to cut interest rates by half a percentage point at its mid-September policy meeting. However, a raft of better macroeconomic data has changed the odds and traders now expect a further 28% reduction.
Meanwhile, the dollar index The US dollar fell to its lowest level since late December overnight at 101.30 but then rose 0.12% to 101.51. Jane Foley, head of currency strategy at Rabobank, said there was no obvious reason behind the dollar’s fall and that markets were made more nervous because many traders were on summer holidays.
Powell’s opening speech this Friday at the summit of Jackson Hole The Kansas City Federal Reserve’s rate cut will be closely scrutinized for any hints about the likely size of a rate cut next month and whether borrowing costs are likely to decline at each subsequent Fed meeting.
The move in yields and the dollar “was perhaps a function of the lackluster summer trading activity,” Foley said. “It clearly sets us up for some risk if Fed Chair Powell is not as dovish on Friday as the market expects him to be.”
The Uruguayan dollar differs from the global one and rises slightly
The exchange rate closed yesterday at 40.261 pesos with a rise of 0.04%, according to the quote of the Central Bank of Uruguay (BCU), allowing the US currency to recover after the decline at the beginning of the week and remain above 40 pesos.
The greenback thus traded against what happened globally, a scenario in which it weakened. In any case, the dollar It is in slightly negative territory so far this month, with a drop of 0.03%, while the annual cumulative figure rose by 3.18%.
On the reference board of the Republic Bank (BROU), he dollar The retail bill was offered at 39.05 pesos for purchase and 41.45 pesos for sale. For its part, the preferential value of the eBROU Dollar It was at 39.55 pesos for purchase and 40.95 pesos for sale.
Source: Ambito
