- The US dollar falls against Chilean peso, currently quoting in 937.82.
- The dollar index (DXY) loses 0.33% today, consolidating within the operating range of June 3 at 98.94.
- The ADP employment report increased by 37,000 in May, standing well below the estimates of analysts.
- The United States ISM services falls to 49.9 points in May, worsening market projections.
The USD/CLP reacted down from May 30 to 99.39, finding vendors that dragged parity to a minimum of the day at 98.94. At the time of writing, the USD/CLP decreases 0.26% on Wednesday, operating currently 937.63.
Chilean weight gains ground after a disappointing employment report in the US.
According to information provided by Automatic Data Processing (ADP), employment in the private sector increases at a rate of 37,000 positions in May, disappointing the 115,000 planned and the 60,000 observed in the previous period.
The dollar index fell 0.33% on Wednesday, falling from May 30 to 99.39 to a minimum daily at 98.94.
In another front, the United States Office Administration Institute (ISM) was 49.9 in May, below the 52 projected and 51.6 registered in April.
In this context, the Chilean weight operates with profits in the day, while the USD/CLP goes back 0.31% daily, consolidating in minimums of June 2 in 937.63.
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 immediate support is located at 928.21, a pivot point of May 9. Downwards, the following key support is 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.
