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The dollar-peso rose above $950 this Wednesdayas the US currency strengthened globally due to inflation concerns, and the search for refuge before the macroeconomic and political events that remain to be known this week.
At the close of the Chilean exchange market, the currency rose $9.93 to $952 in the Bloomberg series, thus remaining in highs since April 30 and above its 100-day moving average.
The rise came in line with he dollar index, which advanced 0.45% to reach 106 points for the first time in two months. For its part, copper was trading stable at US$ 4.37 per pound in New Yorkretaining its lowest price since mid-April.
Multiple factors
“A perfect storm has come together for the exchange rate to be at current levels: the expectations of rates abroad, the appreciation of the dollar globally, the purchases of dollars by non-residents here in Chile and the fall of copper” , said to D.F. the head of foreign currency at Vantrust Capital, Carlos Martínez.
The 10-year US Treasury yield rose 6.8 basis points (bps), in the midst of an international sale of debt assets. In addition, decreased confidence traders on the possibility of the Federal Reserve cutting the key rate twice this year.
“The most drastic change has come in rate expectations. Fed officials have said that inflation remains a problem, and that there will most likely be no cuts this year. (Fed Chairman Jerome) Powell said that the next movement was downward, but some of the members have said that they could even raise it,” Martínez reviewed.
Regarding Chile, he noted that the sales of dollars by the Ministry of Finance have exacerbated purchases by non-residents, since they have not been made under a predictable itinerary.
Pending milestones
It will be published in the US tomorrow, Thursday. the final revision of the Gross Domestic Product (GDP) for the first quarter, and on Friday they will come personal consumption and expenditure (PCE) indices for May. All this occurs in a context where they have seen inflationary spikes in Canada and Australia.
“We maintain a moderately bullish bias on the dollar for today and tomorroweven though Friday’s core PCE may be a catalyst for the Fed to show dovish (more focused on growth than inflation) and the dollar weakens,” wrote ING currency strategist Francesco Pesole.
He also warned that today there is a “market caution regarding risk assets, before Sunday’s vote in France”, referring to the controversies legislative elections called by President Emmanuel Macronafter the heavy political defeat of his coalition in the European Parliament elections.
