The price of the dollar sank to levels of $960 this Friday after the February CPI largely exceeded market expectations, easing upward pressures from trading carry trade in recent sessions. Added to this were the figures from the long-awaited official payrolls report in the United States, which validated expectations of a cut in interest rates by the Fed in June.
The local parity fell $19.83 to $962.7 at the close of the session on Bloomberg screens, registering its largest daily decline since November 14, 2023, and a weekly drop of $5.53 that is the second in a row. This is how it widens its distance from the $990 levels reached in February, which were the highest in 17 months.
The consumer price data was key, since the cups swap of the Chilean market jumped by up to 14 basis points (bp) after early in the morning the INE reported that The CPI rose 0.6% monthly in February. Meanwhile, on the external plane, the dollar index fell to its lowest since January and the two-year Treasury bond eased to its lowest interest rate since February.
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“The CPI higher than expected surely “is putting a cold shoulder on the market regarding an acceleration in the pace of declines in the Monetary Policy Rate (MPR),” said to DF Fynsa’s chief economist, Nathan Pincheira, highlighting that “expectations regarding the fall in the rate differential with the US would be moderating.”
The Chilean peso was by far the strongest currency in the world in the session, even though Comex copper fell 1.04% to US$ 3.88 per pound at the time of closing of the local market.
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Also published today the non-farm payrolls report for February in the US, where the new payrolls exceeded estimates, but were accompanied by downward revisions in the previous months. Furthermore, The unemployment rate unexpectedly rose to two-year highs, and average wages slowed.
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“All this is being well received by the North American market and has generated declines in the dollar globally. “This effect is enhanced by the CPI figure released this morning, which could lead the Central Bank to be less aggressive in TPM cuts, generating a widening in the rate differential.” said Sura Investments Investment Strategist, Ariel Nachari.
Pincheira analyzed for his part that “although the employment data in the US came out above expectations and shows that the North American economy remains strong, “The impact that this would have on the normalization of the federal funds rate would not be enough to eclipse the local price data.”