- The US dollar rebounds against Chilean peso, operating when writing about 941.03.
- The dollar index (DXY) advances 0.18% on Friday, oscillating within the range of May 29 at 99.53.
- The United States personal consumption expenditure price index was 0.1% in April, in line with market estimates.
- Chile’s industrial production increased 3.8% in April, standing below its previous reading.
The USD/CLP reacted upwards from May 12 to 935.33, where aggressive buyers attracted that led to maximum parity of May 23 in 942.60. Currently, the USD/CLP earns 0.36% on the last day of the week, currently quoting at 942.23.
Chilean weight loses ground after the US PCE
Based on information presented by the United States Economic Analysis Office, the Personal Consumption Expenditure Price Index corresponding to the month of April stood at 0.1% in line with the projections of analysts.
At the same time, the expense price index in underlying personal consumption its located at 2.5% in April complying with the forecasts and below the 2.7% observed in March.
After these events, the dollar index (DXY) advances 0.23% daily, bouncing from minimum of May 27 99.13, to reach a maximum of 99.66, oscillating within the previous session at 99.59.
On the other hand, the National Institute of Statistics of Chile, reported that the annualized industrial production corresponding to the month of April was increased by 3.8%, below the 4.5% observed the previous month.
The Chilean weight loses land today, while the USD/CLP rises 0.36% on the last day of the week, reaching maximum of May 23 in 942.23.
Technical levels in the USD/CLP
The USD/CLP formed 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. To the south, 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.
