He global dollar heads to his fourth weekly profitwith stability supported by expectations of fewer rate cuts by the Federal Reserve (Fed) in the coming months and by the growing market bets on a possible return of donald trump as president of USA.
He dollar index — which measures the greenback’s performance relative to a basket of six other internationally relevant currencies — was steady at 104 after hitting a roughly three-month high of 104.57 earlier in the week and preparing for a fourth weekly gain, up 0.5% this week. This would be the longest stretch of weekly dollar rallies since February.
Currency options volatility has spiked recently, reflecting demand among traders to hedge the variety of risks that will emerge in the next two weeks: from the elections in Japan and USA to the main decisions on interest rates of the central banks and the first labor budget of Great Britain In 14 years, they must navigate a series of events in a short space of time, all while growing concern about the growth in Europe and Asia.
“We have had this rebound of dollar based on expectations that the Federal Reserve will cut rates more gradually. I also believe that the dollar is supported by the level of global uncertainty, not just around the US elections,” market strategist at City Index, Fiona Cincotta.
“It just seems like we’re in kind of a slightly shaky moment, which I think adds support to that kind of safe-haven dollar trade,” he added.
For its part, this uncertain context for the markets took the yen to three-month lows before an election in Japan over the weekend that could complicate the plans of the Bank of Japan (BOJ) to normalize rates, while opinion polls show that the ruler Liberal Democratic Party (LDP) You could lose your long-standing domain. The next meeting of the central bank will be on October 30 and 31.
He yen reversed some earlier losses to remain unchanged on the day at 151.705, having shrugged off data from inflation of Tokyo Friday that showed underlying consumer prices were below the BOJ’s 2% target for the first time in five months.
“There is some suggestion that if the LDP loses its majority – which, in my view, is a distinct possibility – then there is a chance that it could further muddy the waters as far as BOJ policy normalization is concerned.” , said Ray Attrill, head of foreign exchange strategy national Bank of Australia. The yen has fallen about 5.3% so far this month, setting it up for its worst monthly drop since April 2022.
The dollar strengthens in the range of $41 in Uruguay
In Uruguay, meanwhile, the dollar closed practically stable, with a slight increase of 0.01% compared to Wednesday, trading at 41,602 pesos, according to data from the Central Bank of Uruguay (BCU), so it has been rising for three days and seems entrenched in the middle zone of the 41 peso range.
In this way, the US currency managed to overcome the downward behavior at a global level this Thursday, since the dollar index fell 0.37%, after three consecutive rounds of rise, compared to the strength of the euro and the Japanese yen.
Source: Ambito
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