He dollar worldwide reached its highest level in two months against the main currencies this Monday, as traders reconsider their bets on a drastic interest rate cut by the Federal Reserve this year.
This change of direction comes after Friday’s US jobs report far exceeded market expectationsgenerating a rise in US bond yields and strengthening the country’s currency.
Treasury bond yields continue their rise this day, especially after Jerome Powell, chairman of the Fed, indicated that the central bank could take its time before considering interest rate cuts.
Dollar vs. other currencies
In early trading of the Asian session, the Japanese yen fell to its lowest level since early December, reaching 148.82 per dollar before stabilizing at 148.43 yen.
As for the euro, it registered a decrease of 0.26%, reaching $1.0762, approaching its lowest since mid-December. These moves contribute to a 0.12% rise in the dollar index, reaching 104.17, its highest level since December 11.
In an interview with CBS’ “60 Minutes” broadcast Sunday night and Thursday, Powell again confirmed that the Fed could be “prudent” in making decisions about interest rate cuts, supported by the strength of the economy that provides confidence in the deceleration of inflation.
Federal Reserve funds futures now suggest a cut of about 120 basis points (bps) this year, compared to 150 bps at the end of last year. The probability of a cut in March has decreased to 16%, from 50% a week ago.
On the international scene, the pound sterling decreased by 0.17%, reaching $1.2612, approaching its lowest in two weeks.
On the other hand, China’s central bank continues to use official guidance to maintain the stability of its currency, setting the average yuan exchange rate 1,018 points above the Reuters estimate, marking the largest discrepancy since November 2023. A Despite this, the onshore yuan fights against the strength of the dollar and closes the local session at 7.1982 units per dollar, its weakest level since November 17.
Source: Ambito
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