This Monday, the dollar cuts its early gains and falls against major world currencies as investors are focusing on the divergence of central bank policiesat a time when the impact of the oil production cuts complicates the inflation outlook.
The announcement made on Sunday Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut their production targets sends oil prices rising about 8% in early trading in Asia on Monday.
In that context, the dollar indexwhich measures the currency’s performance against a basket of six currencies, including the eurodown 0.4% at 102.49.
The market expected OPEC+, which met on Sunday, to maintain the cuts of 2 million barrels per day (bpd)already in force until the end of 2023, but instead announced further production cuts of about 1.16 million bpd.
Thus, the dollar, which had skyrocketed after the surprise cut in production, slowly reverses course during the European morning to trade lower as attention turns back to central bank policy.
Data released on Friday showed an acceleration in core prices in the Euro zonewhich analysts say should strengthen the case for more rate hikes by the European Central Bank, while the core inflation gauge in the United States came in slightly lower than expected at 4 .6%
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This week, the market’s focus will be on the United States activity data and in Friday’s employment report, although many markets will be closed for the Easter holiday.
The operators value at around 60 basis points the possibility of that the ECB continues to tighten its monetary policy from here to the end of the year. Instead, markets expect the Fed to tighten by about 15 basis points, with a 40 basis point rate cut between now and December.
The euro and other currencies rise
While, the euro rises 0.2%at $1.0865, after hitting a one-week low of $1.0788 early in the session.
The dollar rose 0.3% to 133.23 Japanese yenafter previously reaching its highest level since March 17.
And sterling gains 0.2% to $1,235, while the dollar is up 0.1% against the Swiss franc.
As for cryptocurrencies, bitcoin added 0.6% to $28,340.
Source: Ambito
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