In terms of forecasts, markets now value the probability of a rate cut by the Fed in March at 60%, in contrast to 90% at the end of December.
The supermarket dollar Firmly holding most of last week’s gains, consolidating its most significant rise since July and ending the streak of declines that characterized the end of 2023.
The euro, in contrast, remains virtually unchanged, trading around $1.0934, dragged down by a 0.9% drop over the previous week, which marks the end of its recent recovery. The yen, for its part, operates at levels of 144.5 units per dollar, experiencing a marked decrease from 140.8 at the beginning of the current year.
The dollar index, a measure that contrasts the US currency with a basket of six major currencies, remains at 102.53 unitss. This figure reflects an increase of 1% over the past week, marking its most significant advance in six months.
Dollar: the data that the greenback expects
This rebound is influenced by data that indicates a marked slowdown in inflation globally, which fuels expectations of reductions in interest rates by central banks. In particular, there is speculation about the possibility of cuts by the Federal Reserve, thus fueling a rally in equity markets.
Although the usual trend indicates that rising stocks and falling US Treasury yields could negatively impact the dollar, Monex Europe’s Simon Harvey points to a “certain indigestion” in the markets since the start of the year.
“In essence, the general consensus last year suggested that the Fed would adopt a more flexible policy and that growth conditions would improve globally. But we have found a dose of reality,” he says.
In terms of forecasts, markets now value the probability of a rate cut by the Fed in March at 60%, in contrast to 90% at the end of December.
Expectations could be shaken again with the release of US inflation data scheduled for Thursday. This follows reports on Friday that indicated an increase in employee hiring by US companies in December, accompanied by a sustained pace of wage increases. These data suggest the persistence of a robust labor market.
Source: Ambito
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