The dollar in Chile closed the week with a downward trend and below $940. The United States currency began a trend of losses after resuming operations after the Labor Day holiday, a period when the international market learned about the Federal Reserve’s rate decision and the employment situation in the United States.
At the close of the day, the dollar fell $7.30 compared to yesterday’s close on the Chilean Electronic Stock Exchange (BEC) and thus the dollar reached a value of $938.50 per unit. Thus, the currency recorded a drop of $12.5 in the week and the third consecutive week with losses, where it fell $34.
“The price of the dollar has registered declines in recent sessions, in line with the behavior of its external fundamentals and being more pressured by data from the US,” commented Ricardo Bustamante, deputy manager of studies at Capitaria.
However, the United States currency reached a minimum of $932 in the first part of the day and then moderated part of its losses. While, on the upper side, the currency was close to its closing level yesterday and registered a maximum of $944.90 per unit.
The U.S. currency around the world rose as traders increased bets that the Federal Reserve will implement its first interest rate cut of this year in September, after a U.S. government report on Friday showed that the Job growth slowed more than expected in April and annual wage increases cooled.
Interest rate futures prices point to a 78% chance of a rate cut at the U.S. central bank’s mid-September meeting, up from 63% before the report.
Traders also now expect two 25 basis point rate cuts this year, down from one before the release of nonfarm payrolls data.
Against this backdrop, the dollar index, which measures the performance of the currency against a basket of the most important currencies, lost 0.24% to 105.04 points.
Meanwhile, the Chilean peso was also driven by the strength of copper. Metal prices rebounded on Friday, supported by a weaker dollar and forecast revisions showing a decline in supply following mine outages.
Thus, the three-month value of copper rose 1.33% to US$4.56 per pound on the main Comex futures exchange. Meanwhile, the value of copper spot copper rose 0.8% to US$ 4.41 per pound, but fell 1.34% in the week after four increases.
“There is a strong backdrop and sentiment has clearly changed massively for copper and other metals. The question is whether copper has risen too much,” said Nitesh Shah, commodities strategist at WisdomTree.
Shah cited figures released this week by the International Copper Study Group, which sharply cut its forecast for a global surplus this year to 162,000 tonnes, down from 467,000 forecast in October.
Also contributing to the metals market was the dollar index, a weaker dollar makes raw materials priced in the US currency cheaper for buyers using other currencies.
Additionally, metal volumes were lower than normal as Chinese markets remained closed for the May 1-3 Labor Day holiday.
