While markets have priced in a quarter-point rate cut by the Federal Reserve (Fed) Next week, investors are awaiting consumer price data on Wednesday.
“The rise in unemployment that we saw in November really only cements the case for a 25 basis point cut,” said Michael Brown, senior research strategist at Pepperstoneto Reuters. “Unless we get a really high inflation number, but that’s certainly not the base case,” he added. “The Fed is much more focused at this moment on the labor market than on the evolution of inflation,” he stressed.
Data on Friday showed U.S. job growth rose in November, but a rise in the unemployment rate to 4.2% indicated a easing of the labor market that should allow the Fed to cut interest rates again.
He euro remained stable against dollar at $1.0555, after having fallen as much as 0.3%, while the greenback gained 0.21% against the yento 150,350. He dollar indexwhich compares the currency with six other similar currencies, was trading stable at 105.92.
Brown expected upcoming U.S. inflation data, the U.S. monetary policy meeting European Central Bank (ECB) Thursday and the Fed’s rate decision next week will lead to subdued currency trading for now “given the amount of event risk we have on the horizon.”
The strategist of Mizuho BankVishnu Varathan, also pointed out a series of geopolitical events, such as the fall of the regime of Bashar al Assad in Syriaalong with macro transactions and related to the assumption of donald trumpwhich give markets greater impetus to hold long dollar positions.
He Australian dollar gained 0.80% against the greenback and the kiwi rose 0.55%, after China announced its first change in monetary policy since 2010 to stimulate growth.
The two currencies often serve as a substitute for the chinese yuanwhich strengthened in the offshore market and left the dollar down 0.2% at 7.2722.
China will adopt an “appropriately loose” monetary policy next year as part of steps to support economic growth, implement a more proactive fiscal policy and step up countercyclical adjustments “unconventional,” state media reported Monday, citing a Politburo meeting.
Last week’s headline, Bitcoinwhich reached six figures for the first time by hitting a record high of $103,649, was last at $98,641.
Source: Ambito
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