Investors bet on the US currency after the Federal Reserve anticipated a single interest rate cut for 2024.
He dollar global rose on Thursday, recovering part of the losses caused on Wednesday by inflation data in USA weaker than expected and after the Federal Reserve (Fed) forecast a single interest rate cut this year.
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He dollar index, which compares the US currency with a basket of six prominent currencies, gained 0.49%, to 105.20 units, after the sharp fall due to the cooling of the inflation.
Meanwhile, the euro It fell 0.65% to $1.0739. Furthermore, the dollar rose 0.11% against its Japanese pair, to 156.89 yen, waiting for the Bank of Japan concludes a two-day meeting on Friday in which it will study the possibility of cutting its bond purchases.
“I think the reaction to the CPI was a little overblown. It was almost a relief that it wasn’t worse. And that’s what triggered such a strong knee-jerk reaction,” he said. Fiona Cincotta, from City Index. “We saw how the dollar declined when we heard the news from the Federal Reserve and today it also tends to rise. In the cold light of day, perhaps the inflation data has not been as ‘refreshing’ as the market initially thought” , he said at the beginning of the day.
It is that the inflation accelerated to an annual rate of 3.4%, still well above the 2% target of the Fed. Later on Wednesday, the US central bank kept the funds rate at 5.25-5.5%, and policymakers’ average projection for the number of cuts this year was reduced to just one, down from the third of March.
Producer prices fell in the United States
Furthermore, this Thursday it was learned that the producer prices in the United States (IPP) fell unexpectedly last month, after having risen 0.5% in April, while the underlying prices They remained stable, after the 0.5% increase in the previous month.
The combination of the publications of the CPI and the PPI makes it probable that the personal consumption spending (PCE), the Fed’s preferred measure of inflation, also shows downward pressure on prices.
“Today’s PPI comes after a weaker-than-expected CPI (…) that will feed into what will likely be a somewhat softer core PCE deflator when we know it at the end of the month,” he said. Marc Chandler of Bannockburn Global Forex in New York.
