He global dollar retreated slightly from its 10-week high against the yen and a nearly two-month high following the release of the inflation index in USA, and operators see it as less and less likely that Federal Reserve (Fed) move quickly into greater monetary flexibility. In Uruguay, The currency behaved bullishly and once again approached the 42 peso range.
He dollar index —which measures the performance of the greenback in comparison with a basket of six other internationally relevant currencies— fell 0.1% after the publication of the consumer price index (CPI) of September. It fell from a nearly two-month high touched overnight, as traders further reduced bets on rate cuts in the United States this year after last week’s unexpectedly strong payrolls data.
The biggest movement of the currency was against the yen, sensitive to rates, falling 0.6% to 148.43 yen.
US inflation, key
The projection of the specialists pointed to a core inflation of the United States to remain stable at a year-on-year rate of 2.3%, said economists surveyed by Reuters.
However, the CPI registered a price increase of 0.2% monthly and 2.4% in the year-on-year comparison. Although it was the smallest year-on-year increase since February 2021, the figures exceeded the 0.1% and 2.3% expected by analysts surveyed by Reuters. Furthermore, excluding the volatile components of food and energy, the CPI rose 0.3% in September, again slightly above expectations.
The minutes of the last meeting of the Fed, released overnight, confirmed the central bank’s focus on keeping the labor market healthy. “The argument in favor of a more gradualist approach is now definitely the central position,” he explained in that sense Alvin Tan, head of currency strategy for Asia in RBC Capital Markets. “Market momentum is to reconsider how much it will actually cut the Federal Reserve in the coming months. “I think that momentum can grow, because the flow of data from the United States has been relatively good recently,” he added.
In parallel, the operators put an 85% probability that the Fed cut rates by 25 basis points in its next policy decision on Nov. 7, with a 15% chance of no change, the tool showed FedWatch of the CME Group. A week earlier, markets considered a cut certain, with a 35% chance of another half-point reduction.
Two consecutive days of rise in Uruguay
In Uruguay, meanwhile, the dollar rose 0.61% compared to Tuesday, closing at 41.796 pesos in the interbank price of the Central Bank of Uruguay (BCU), thus chaining two consecutive days on the rise and being close to returning to the range of 42 pesos.
The greenback accumulates a monthly variation of 0.37% and an annual variation of 7.11%, since its price is 2.77 pesos above that registered after the closing of the last exchange day of last year.
Source: Ambito
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