- The US dollar gains traction against Chilean peso, quoting when writing about 944.23.
- The dollar (DXY) index rebounds 0.19% today, consolidating within Tuesday’s operational range at 99.46.
- Copper prices go back 2.34% daily, reaching minimum of May 2 at $ 4,5845 per pound.
- The Commercial Balance of Chile registered a surplus of 1,923 million dollars in April, below market estimates
- The focus of investors will be in the Federal Reserve Interest Decision, the consensus hopes that it will remain unchanged at 4.50%
The USD/CLP marked a minimum of the day at 937.75, finding aggressive buyers that promoted the maximum parity of May 5 in 944.24. At the moment, the USD/CLP rebounds 0.56%, operating over 944.23.
The Chilean weight depreciates pending the decision of the Federal Reserve
According to information published by the Central Bank of Chile, the commercial balance of the Andean country showed a surplus of 1,923 million dollars in April, slightly higher than those expected already the 1,877 million dollars observed in March.
On the other hand, copper prices slide 2.34% on Wednesday, falling from maximum of April 30 on 4,7411 $ until reaching minimum of May 2 in $ 4776, ending with a streak of four consecutive days upward.
The dollar index (DXY) rises 0.19% in the day, oscillating within the range of the previous session at 99.46.
In this scenario, the Chilean weight operates with losses, while the USD/CLP advances 0.56%, reaching May 5 in 945.23.
The attention of investors is concentrated in the decision of interest rates of the Federal Reserve. The consensus of analysts foresees that it remains unchanged in a range between 4.25% and 4.50%.
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 at 1,007.73, maximum of April 9. To the south, the important support is located at 915.57, a pivot point 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.
