- The Dollar gains 0.21% on the day against the Chilean Peso, currently trading at 1,008.03.
- The Dollar Index (DXY) rose 0.08% on Thursday, remaining within the operating range of the previous session.
- US retail sales increase 0.4% in December, below market estimates.
- The focus of operators will be on China’s GDP and Industrial Production, to be published at the close of the session.
USD/CLP set a daily low of 1,003.58, attracting buyers who pushed the pair to a three-day high of 1,010.73. At the time of writing, USD/CLP is trading above 1,007.88, up 0.21% daily.
The Chilean Peso depreciates after US retail sales
The Dollar Index (DXY) presents a marginal gain of 0.08% today, currently trading at 109.22, within the range of the previous session.
On the other hand, the United States Census Bureau reported that December retail sales rose 0.4%, below the 0.6% estimate and the 0.8% recorded in November. Likewise, weekly applications for unemployment benefits reached 217,000 in the week that ended on January 10, a figure higher than the 210,000 reached in the previous week.
In this context, the Chilean Peso loses traction against the US Dollar, while the USD/CLP gains 0.21% on the day and ends a streak of three consecutive downward sessions, visiting highs from January 13 at 1,010.73.
Traders will focus their attention on China’s economic data at the close of the day, among which the Gross Domestic Product and Industrial Production stand out.
Technical levels in the USD/CLP
USD/CLP reacted higher on short-term support given by the December 6 low of 975.60. The next key support level is at 940.90, the October 24, 2024 low that coincides with the 38.2% Fibonacci retracement. To the upside, the nearest resistance is around 1,015.41, the January 13 pivot point.
USD/CLP Daily Chart
US Dollar FAQs
The United States 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 alongside local banknotes. According to 2022 data, it is the most traded currency in the world, with more than 88% of all global currency exchange operations, equivalent to an average of $6.6 trillion in daily transactions. After World War II, the USD took over from the pound sterling as the world’s reserve currency.
The single most important factor influencing the value of the US Dollar is monetary policy, which is determined by the Federal Reserve (Fed). The Fed has two mandates: achieve price stability (control inflation) and promote full employment. Your main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% target set by the Fed, the Fed raises rates, 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 enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit into a clogged financial system. This is an unconventional policy measure used when credit has dried up because banks do not lend to each other (for fear of counterparty default). It is a last resort when a simple lowering of interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis of 2008. It involves the Fed printing more dollars and using them to buy US government bonds, primarily from financial institutions. QE usually leads to a weakening of the US Dollar.
Quantitative tightening (QT) is the reverse process by which the Federal Reserve stops purchasing bonds from financial institutions and does not reinvest the principal of maturing portfolio securities 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.
