- The dollar fell 0.35% daily against Chilean peso, quoting when writing about 958.24.
- The United States consumer price index was 3.0% in January, exceeding market estimates.
- The look of investors will be on the second day of the president of the Federal Reserve, Jerome Powell, before the US Senate.
- The economic agenda contemplates at the closure of the market, the speeches of Christopher Waller and Raphael Bostic, members of the Fed.
The USD/CLP registered a daily maximum in 962.90 where it attracted sellers that dragged parity to a minimum of more than three months at 952.78. Currently, the USD/CLP operates over 958.30, losing 0.35% on Wednesday.
Chilean weight gains traction after the United States CPI
Based on information presented by the Office of Labor Statistics, the consumer price index was 3%, exceeding the previous and estimated 2.9%. At the monthly level, the CPI increased 0.5%, above 0.3% projected and 0.4% recorded in the previous month.
The focus of investors will focus on the statements of the president of the Federal Reserve, Jerome Powell, before the United States Senate. Powell has reiterated a cautious position in his policy, avoiding commenting on Donald Trump’s tariff rhetoric. At the close of the market, Christopher Waller and Raphael Bostic, members of the FED, will offer greater indications on the monetary policy of the Central Bank.
The Chilean weight takes up the upward perspective, reaching maximums of more than three months, while the USD/CLP reaches minimums not seen since November 5, 2024 at 952.78.
Technical levels in the USD/CLP
The USD/CLP reacted down from a short -term resistance given by the maximum of January 17 in 1,017.05. To the south, we observe the first support at 940.90, minimum of October 24, 2024, supported by the 38.2% fibonacci setback. The following key support is located at 894.25, a pivot point of September 30, 2024.
USD/CLP daily graphics
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
