The dollar retreated again on Tuesday after the publication of a price index which confirmed the slowdown in inflation in the United States, traders hoping to see the American central bank (Fed) go less far than expected in its monetary tightening.
Around 7:50 p.m. GMT, the greenback lost 0.29% against the single currency, at 1.0363 dollars for one euro.
The common currency of 19 European countries benefited, in addition to the weakening of the dollar, from the marked rebound of the German ZEW index, which measures the morale of investors, who described the current economic situation as slightly better than in October.
The decline of the “greenback”, one of the nicknames of the dollar, was much more marked against the pound sterling (-0.88%), which benefited from employment figures testifying to a still tense British labor market .
The “buck”, another nickname for the dollar, suffered both “from signs of appeasement from the Fed, an improvement in risk appetite and a more optimistic view of the winter period” at come, explained George Vessey, of Convera, in a note.
This renewed appetite for risk benefited, in addition to the pound sterling, to currencies considered to be more volatile, such as the Australian and New Zealand dollars.
Already weakened, the dollar took on a new shine on Tuesday with the publication of the PPI producer price index in the United States, which emerged, in October, up 0.2 points over a month less than expected. by economists.
Over one year, it reached 8.0%, its lowest level since July 2021.
“This figure was very moderate”, commented Ivan Asensio, of Silicon Valley Bank, and confirms the deceleration of inflation, after the consumer price index CPI, which also emerged on Thursday at a lower level. than anticipated.
“Equity markets reacted positively” to the news, “and the direct consequence is that the most risk-sensitive currencies also rose,” added the analyst, recalling “that the correlation between equity markets and foreign exchange has been very strong this year.
However, Ivan Asensio considers it “premature to say that we have reached a peak for the dollar in the current cycle”, because inflation, even lower than in recent months, remains clearly above the key rates of most central banks.
And to the extent, he says, that several central banks have already eased off, unlike the Fed, and others are about to do so, “because they don’t have the freedom to raise” their rates sharply again, the dollar could take advantage of a gap created by the Federal Reserve, ready to continue its tightening for several more months.
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7:50 PM GMT 9:00 PM GMT