(Finance) – After the losses suffered following the release of US inflation data, which were lower than expected and reinforced speculations about reaching a peak in consumer prices, the dollar showed its strength again. The strength of the US economy (despite the technical recession), the European energy crisis which feeds fears for the growth of the Old Continent, and the fact that the Fed is far ahead in its restrictive cycle than the ECB.
“There divergence of monetary policy, between a FED that is already aggressively raising rates and an ECB that has just started, will continue to support the dollar – comments Thomas Hempell, Head of Macro & Market Research at Generali Investments – It is true, the US currency is expensive and seems to have reached more extreme levels than relative returns. Meanwhile, most of the other major central banks are catching up on rate hikes (with the notable exception of the BoJ). “
“However, it is Geopolitical tensions and rate uncertainties are unlikely to ease anytime soonconfirming the dollar as a safe haven “, adds the analyst, underlining that the EUR / USD exchange rate has room to temporarily fall below par.
However, the strengthening of the dollar is not only against the euro. L’US dollar indexan index of the value of the US dollar in relation to a basket of foreign currencies, has regained all losses suffered last week after the US inflation figure. The dollar index is flat at 106.4, after having also reached 104.6 on 10 and 11 August.
“The dollar has corrected by about 3% from last month’s highs,” ING analysts commented. “This has raised some questions about whether the dollar has peaked. Many trading partners hope so, but the reality is. that the Fed is likely to remain in line with its tightening more likely to retest its highs than to correct much lower“.
They were also communicated yesterday weak macroeconomic data from China, which reignited recession worries globally, dragging currencies most sensitive to these fears lower. An appointment that can move the dollar will be tomorrow night, when the minutes of the meeting of the American central bank in July. From the minutes of the meeting, indications could emerge on the Fed’s approach to the next rate hikes.
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