US dollar plunges to one-year lows this Friday, April 14 at the beginning of the trading day this Friday in Europe before the growing expectations that cooler inflation data than expected will cause a soon end of Federal Reserve rate tightening cycle.
He dollar index, which follows the evolution of this currency with respect to a basket of six other main currencies, falls a 0.1% up to 100,602after having touched 100,470, a value that had not reached since April of last year.
The index is on track to record a weekly drop of more than 1%, the steepest since January.
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These dollar losses occur after the publication of the March producer price index report of the United States, which fell 0.5% compared to the previous month, its biggest drop since the start of the pandemic.
The PPI has slowed down in annual terms, rising 2.7% compared to a year agohis least progress in more than two yearsMeanwhile he underlying PPIfrom which the volatile components of the food and energy, decreased by 0.1% compared to February and rose 3.4% compared to a year ago.
These figures are released just one day after the Consumer prices will register their smallest annual increase since May 2021.
It is still expected that Federal Reserve to raise interest rates again next monthprobably just 25 basis pointsbut expectations rise that the US central bank Cut interest rates before the end of the year.
“Investors seem to be looking favorably on the Fed’s next easing cycle (after a last hike in May), are convinced the dollar will weaken, and are looking for opportunities,” analysts say. ENG in a note.
This Friday more economic data will be publishedof which the most prominent are the March retail saleswhich are expected to indicate a monthly contraction of 0.4%same as the previous month, as consumers battle inflation that limits their disposable income.
The euro rises 0.1% to the level of 1.1058 and hits new one-year highs, after data released on Thursday showed that prices at the German consumption remains at high levelswhich suggests that the European Central Bank will continue to raise interest rates for longer than its American counterpart.
The ECB needs to keep raising interest rates, it said on Thursday Pierre Wünsch, member of the Governing Council, and market expectations of other increases of 75 basis points are “reasonable”but not expectations of a rate cut at the end of the year.
“I think that in May the rise will be about 25 or 50 basis points“, has said Wunsch. “If there is another surprise to the upside in core inflation and the (quarterly ECB) survey on loans It’s not so bad it may have to be 50″.
More data will be published this Friday inflationsuch as consumer prices in March France and Spain.
The pound barely fell 0.02% to 1.2517, after reaching 10-month highs at wheel opening. Everything points to the bank of england will upload again interest rates in maySince the inflation of the United Kingdom remains in two figuresafter surprising by accelerating to the 10.4% in February.
“The weaker dollar is keeping the pound close to the 1.2500 level and it looks like pressure is being put on for it to reach 1.2650/2750, again driven by the dollar,” adds ING.
He and in gains 0.03% to the 132.51 level, while the yuan It rose 0.3% to 6.8508, with the Chinese currency boosted by PBOC Governor Yi Gang’s reiteration of the 5% of GDP target for 2023.
Source: Ambito
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