The price of the dollar extended its rise on Monday in line with the currency’s advance globally and the sharp drop in international stock markets after inflation data released on Friday in the United States raised expectations of further increases in the dollar. interest rates in the world’s largest economy and amid renewed concerns over rising Covid-19 cases in China, which dragged copper down.
american currency It rose $22.41 to $868.41, recording its biggest daily rise since February 24 and its highest level since May 9, accumulating an increase of $46.2 over the past three sessions.
In this way, the Chilean peso has been the most weakened currency in the world so far.
Thus, in addition, the currency was within $8 of its historical high of $876 seen on December 20, 2021.
“Globally, investors are internalizing higher and higher rate hikes in the United States, especially after learning of the highest inflation in more than 40 years last Friday, supporting a sharp decline in assets linked to the economic cycle and a strong dollar globally,” said Ricardo Bustamante, Head of Business Research at Capitaria.
For his part, Juan Ortiz, senior market analyst at XTB Latam, said so.“The market is watching for the Federal Reserve’s interest rate decision meeting that will announce the long-awaited rate hike for this month.. Strong inflationary data puts investors on alert where for the next meeting in July the odds of a 75 basis point rate hike rise to 57% and opens up the possibility of a move above 75 basis points at Wednesday’s meeting.”
“Undoubtedly, the prospect that the Fed is still out of control of inflation increases the odds that the dollar will continue to rise globally and thus impact the exchange rate,” he added. .
Indeed the dollar indexwhich measures the price of the currency against a basket of six liquid currencies, including the euro, rose 0.88% to 104.93 points.
The Fed has not suffered the pile of interest in 75 points since 1994, and the prospect of a monetary policy endurecimiento superior al esperado elevaba el nerviosismo respecto has known impacto sobre el consumption y la actividad económica, lo que podría generar una recession en United States.
The combination of collapsing consumer confidence, unexpected intense price pressures and expectations of Fed activism conspire to create a particularly toxic cocktail for risk assets. Rabobank strategists were quoted by Bloomberg as saying.
Yield curve inversion “resonates with the idea that the need to deal with elevated price pressures will cause the Fed to push the economy into recession,” they added.
The rise in the exchange rate was also reinforced by the fall in the price of copper, the country’s main export product.
The spot price closed down 2.59% at US$4.21 a pound on the London Metal Exchange, posting its lowest level since May 25 and its biggest decline since May 12.
Three-month futures for the metal, meanwhile, fell 2.09% to US$4.21 a pound.
This, after rising Covid-19 cases in China raised concerns about the strength of the recovery in demand from the world’s biggest consumer of metals.
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