The dollar fell this day after extending its winning streak this Monday and setting a new high in more than a year. The United States currency lost ground in Chile amid better conditions for the Chilean peso. The local currency gained ground in line with most Latin American currencies that were recovering, although agents operated cautiously before new pronouncements from US Federal Reserve officials are known that offer new clues on rates.
At the close of the day, the dollar fell $5.1 compared to yesterday’s close on the Chilean Electronic Stock Exchange (Bec) and reached a value of $948.9 per unit. Thus, the currency would end its streak of three consecutive days on the rise, where it added $24.5.
However, the dollar reached a minimum of $945.12 during the last operations of the day and then moderated its fall, according to Bec data.
The Chilean peso took a break as copper registered gains after a downward trend. The price of one of the main supports of the national currency rose thanks to the efforts of China, the main consumer of metals, to stabilize its markets and the reduction of inventories, although the strength of the dollar limited gains.
In addition, copper inventories in warehouses registered on the London Metal Exchange fell further, according to daily data, to reach new five-month lows.
Given this, the three-month value of copper rose 0.23% to US$3.78 per pound on the main futures exchange, Comex. Meanwhile, the spot value of copper fell 0.59% to US$3.75 a pound on the London Metal Exchange.
Meanwhile, short-term demand in China is weak as Beijing approaches the Feb. 9-16 Lunar New Year holiday. Also indicative of the weakness of current demand.
Meanwhile, the dollar retreated against major currencies on Tuesday but remained near its highest level in almost three months as strong economic data and a hawkish stance on interest rates from officials of the Federal Reserve boosted the US currency.
A string of strong U.S. economic data, including a strong jobs report on Friday, and recent remarks from Fed Chair Jerome Powell have put paid to speculation about an early and steep interest rate cut that the market had anticipated.
According to the CME Group’s FedWatch tool, traders currently only rate the possibility of a cut in March at 16.5%, compared to 68.1% at the beginning of the year. They also forecast about 117 basis points (bp) of cuts by the end of 2024, compared to the 150 bp forecast at the beginning of January.
Given this, the dollar index, which measures the performance of the US currency against six other currencies, fell 0.22% to 104.22, after having touched 104.60 on Monday, its highest level since November 14.