(New York) The dollar went back on the offensive Monday, after a difficult week, in a market which now doubts that the American central bank (Fed) will send the signal of a possible deceleration from its meeting on Tuesday and Wednesday.
Posted at 4:44 p.m.
Around 8:15 p.m. GMT, the greenback gained 0.83% against the euro, to 0.9882 dollars for one euro. The “greenback”, one of the nicknames of the dollar, rose globally against most currencies, in particular the pound sterling, the Swiss franc or the Chinese yuan.
ForexLive’s Adam Button says the revival of the “buck,” another nickname for the dollar, is partly due to an article by Nick Timiraos, a reporter for the wall street journalwhich announced the Fed’s decision before each of the last three meetings.
He argued on Sunday that the Federal Reserve may need to raise rates more than expected, and for longer, due to the continued strength of consumption in the United States, which is not weakening despite the ongoing monetary tightening cycle.
It was thus against the tide of the central hypothesis of the market, which saw, last week, the Fed on the point of slowing down, as of December, so as not to stifle the economy.
Operators revised their forecasts on Monday and now give a probability of more than 50% to another hike of 0.75 percentage point in the key rate in December, which would be the fifth in a row for the Fed.
In the same spirit, the idea of a key rate above 5% by next May has also regained the majority.
“For (Fed Chairman Jerome) Powell, the game plan is probably to preserve short-term leeway” and not to signal a change in trajectory, said Mazen Issa of TD Securities, on the subject of the Tuesday and Wednesday meeting.
“So there could be disappointment and pain if Powell doesn’t fit into the market view,” part of which has convinced itself of an upcoming Fed deceleration and rate cut soon. end of 2023, considers the analyst.
“The Fed should choose not to appear dovish, as central bankers can rely on two more price indicators by the next meeting,” mid-December.
The CPI indicator is thus expected on November 14 for the month of October and December 12 for the month of November, two days before the final meeting of the Fed’s Monetary Policy Committee for 2022, on December 13 and 14. .
The return of the dollar on Monday was also, according to Mazen Issa, a technical reaction of the greenback after its bad run last week.