- The US dollar rebounds against Chilean peso, operating the time to write about 940.82.
- The dollar index (DXY) advances 0.49% on Tuesday, reaching maximum of June 11 at 98.70.
- The United States retail sales contracted 0.9% in May, worsening market estimates.
- The operators will be attentive to the decision of interest rates by the Central Bank of Chile, to be released today.
The USD/CLP established a minimum of the day at 933.60, where they found buyers who took parity to maximum on June 13 in 940.92. Currently, the USD/CLP earns 0.47% today, quoting at 940.82.
Chilean weight goes back waiting for the decision of its interest rates
The United States Census Office announced today that retail sales fell 0.9% in May, worsening an estimated decrease of 0.7%. This figure aggravates the contraction of 0.1% observed in the previous period.
At the same time, the US industrial production decreased 0.2% in May, disappointing the estimated increase and the previous record of 0.1%.
Despite the weakness of US economic data, the dollar index (DXY) rises 0.49% daily, reaching maximum of four days at 98.70.
The attention of investors will be put in the decision of interest rates that will announce today the Central Bank of Chile, the Consensus of analysts expects to keep the types unchanged by 5%.
In this scenario, the Chilean weight operates in the loss zone, while the USD/CLP replaces 0.47% in the day, visiting maximums of June 13 in 940.92.
Technical levels in the USD/CLP
The USD/CLP established a short -term resistance given by the maximum of April 30 in 961.65. The next key resistance is observed in 1,017.05, pivot point of January 17. To the south, the closest support is located at 915.57, minimum of March 19.
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.
