New York (awp/afp) – The dollar remained firm on Friday, despite the publication of a price index which confirmed the slowdown in inflation in the United States, seen as a positive sign in the perspective of rate cuts of the American central bank (Fed).
Around 8:45 p.m. GMT, the Dollar Index, an index which compares the performance of the greenback against a basket of major currencies, fell by only 0.02%, to 105.879.
“There was a brief reaction to selling” after the Commerce Department posted the PCE report online, noted Brad Bechtel of Jefferies, but the “greenback,” one of the currency’s nicknames American, quickly recovered.
“We are at the end of the quarter, it is a summer Friday, there is less liquidity,” recalled the analyst, to explain the weakness of the variations experienced by the foreign exchange market on Friday, overall.
Prices remained unchanged in May compared to the previous month and the one-year PCE index came in at 2.6%, down from April’s 2.7%.
“Federal Reserve members want to see more encouraging inflation reports before they start cutting rates, but they won’t wait until it falls to 2% (the Fed’s long-term goal) , knowing the risks weighing on employment,” commented Michael Pearce of Oxford Economics in a note.
Operators are currently counting on two cuts from the Fed between now and the end of the year, the first in September.
For Brad Bechtel, “the dollar continues to benefit from the weakness of emerging markets”, in particular the Brazilian real, which fell on Friday against the dollar to its lowest level in almost two and a half years.
The “buck”, another nickname for the United States currency, also caused a new decline in the yen, falling to 161.27 yen per dollar, a first in 37 years.
In addition, the dollar benefited from a surge in US bond rates. The yield on 10-year US government bonds stood at 4.38%, compared to 4.28% the previous day at the close.
For José Torres, of Interactive Brokers, this rise is partially justified by Thursday’s presidential debate, during which neither candidate proposed a concrete solution to restore public finances in the United States.
Cours de vendredi Cours de jeudi 20H45 GMT 21H00 GMT EUR/USD 1,0712 1,0704 EUR/JPY 172,34 172,08 EUR/CHF 0,9627 0,9619 EUR/GBP 0,8471 0,8468 USD/JPY 160,89 160,76 USD/CHF 0,8987 0,8986 GBP/USD 1,2645 1,2639
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