- The Dollar gains 0.15% on the day against the Chilean Peso, operating within the range of the previous session.
- China’s Caixin services PMI stands at 52 points, above analyst estimates.
- The US ISM services PMI exceeds expectations at 56 points in October.
USD/CLP established a daily low of 951.25, finding aggressive buyers that took the cross to a daily high of 957.70. At the time of writing, the US Dollar is trading at 955.55 against the Chilean Peso, gaining 0.15% today.
The Chilean peso loses ground amid the US electoral climate
Based on information published by Markit Economics, China’s Caixin services PMI reached 52 points in October, surpassing projections of 50.5 points and the previous record of 50.3 reached in September. Figures are a clear indication of a rebound in economic activity in China, favoring demand for copper in the short term.
On the other hand, the United States ISM services PMI stood at 56 points in October, above the 53.8 consensus and the 54.9 estimated by analysts.
The attention of analysts will be on the development of the presidential elections in the United States. A significant advance in results is expected at the close of business today.
Technical levels in the USD/CLP
The Chilean Peso formed short-term resistance at 962.04, given by the October 31 high. The next key resistance zone is at 989.40, the April 17 pivot point.
On the downside, we see the first support at 924.33, the minimum of October 11. The next key support area is at 894.25, the September 30 pivot point.
Chilean Peso Daily Chart
The 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.
