The dollar should continue to strengthen and would have a floor at $830. His moves will depend on what the Fed announces; and at a local level of what is happening with the new Government and the Constituent Convention.
The exchange rate had a bullish day and hit highs that passed $840 during today’s session ($842); and after 2:15 p.m. she averaged $834.62.
The dollar is thus approaching highs so far in 2022, coupled with its strength internationally, with a dollar index that rose sharply and exceeds 101,000 points for the second time.
Early this Friday, this scenario was already anticipated: it opened at $829 after comments from members of the Federal Reserve that were increasingly aggressive regarding the future interest rate hikes.
Sebastián Espinosa, senior market analyst at XTB Latam, commented that the currency strengthens levels not seen since 2017.
The foregoing, “after Jerome Powell’s statements yesterday, in addition to other members of the Fed, with a market that already discounts with almost 98% the probabilities of a 50 basis point hike in May and eliminates the possibility of 25 points, giving him just over a 2% chance of a 75-point raise.”
In fact, the expert added, “the outlook changed so much from yesterday to today that investors no longer discount two increases of 50 basis points, but rather one of 50 in May and another of 75 in June, quickly placing the rate in the range of 1.5% – 1.75%. This is without a doubt the news of the day and it has the stock markets with setbacks during today’s session”.
The copperfor its part, recorded sharp falls, also pressing for increases in the exchange rate, coupling with the performance of equities in general and in the midst of still high levels of covid cases in China.
“We must remain attentive to what happens with the Fed and the comments of its members in the coming days, when there are less than two weeks left for the monetary policy decision, in addition to be attentive to what is happening locally with the new Government and the Constituent Convention”Spinoza said.
Lastly, he indicated that we should continue to wait for a stronger dollar which is now “He has a flat for $830 and the opinion of the market regarding the next three decisions on interest rates in the United States will be key for the dollar”.