05/24/2024 – 17:11
The dollar retreated against the euro and the pound this Friday, the 24th, under pressure following data from the University of Michigan survey of consumers in the United States. The pound began to fall, given the greater-than-expected decline in retail sales in the United Kingdom, but regained momentum, while the euro maintained a positive signal even while directors of the European Central Bank (ECB) reinforced the possibility of an interest rate cut in June.
At the end of the afternoon in New York, the dollar rose to 156.95 yen, the euro rose to US$1.0851 and the pound rose to US$1.2737. The DXY index, which measures the dollar against a basket of strong currencies, registered a drop of 0.37%, at 104,724 points, but in the weekly comparison it still rose 0.27%.
The US consumer sentiment index, prepared by the University of Michigan, fell from 77.2 in April to 69.1 in the final reading of May. Analysts interviewed by FactSet they predicted 67.4, which was the preliminary. Inflation expectations in 12 months rose from 3.2% in April to 3.3% in May, below the preliminary 3.5%, while expectations for inflation in 5 years remained at 3.0%, as expected.
The data put pressure on the dollar, with the DXY slightly extending losses seen earlier. In an assessment by Oxford Economics, American consumers are concerned about the prospect of rising unemployment and a slowdown in wage growth, in a context of still high interest rates. The consultancy says an ongoing methodological review and this year’s US presidential election are likely to increase the volatility of the index, but it also believes that the fall in inflation will support confidence.
In Europe, the pound came under pressure earlier, after UK retail sales fell 2.3% in April compared to March, below analysts’ forecast of a 0.5% drop. Capital Economics believes that income should still support activity in the country, while Julius Baer predicted Prime Minister Rishi Sunak’s electoral defeat in early July, but considered that this should have little impact on the market.
Among ECB leaders, Joachim Nagel was yet another voice citing the prospect of a rate cut in June, but considered that the next reduction would only come in September. Isabel Schnabel said she sees this cut in June as likely, if the data generates confidence, but warned against a very rapid cycle of reductions, given the persistence of some of the inflation components.
Among emerging markets, the dollar fell to 902.38 Chilean pesos. At the end of yesterday, the Central Bank of Chile cut its basic rate by 50 basis points, to 6.00%, unanimously, reducing the pace of easing. For Pantheon, there should be gradual cuts in interest rates, guided by indicators in the country.
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