2023-12-18 11:17:03
London (awp/afp) – The dollar still fell once morest the euro on Monday, upset by the turnaround last week by the Federal Reserve (Fed), which displayed a more accommodating and optimistic tone on inflation than that of the others major central banks.
Around 09:55 GMT (10:55 CET), the greenback lost ground once morest the euro, which climbed 0.22% to $1.0920.
The market has taken into account the fact that the Fed’s forecasts “imply three rate cuts next year”, with investors banking on six reductions from March, notes Kit Juckes, analyst at Société Générale.
Currency traders rely above all on predictions of “an almost zero chance of another increase” in Fed rates, weighing down the dollar, according to this analyst.
Last Thursday, the European Central Bank (ECB) and the Bank of England (BoE) both chose a new status quo on their interest rates, while displaying a relatively more offensive speech than the Fed previously.
Christine Lagarde, President of the ECB, repeated Thursday that her institution did not intend to “let down its guard” in the face of inflation and that it had “not discussed rate cuts at all” during its meeting.
On the BoE side, “the markets anticipate reductions (rates, editor’s note) from May,” indicates Susannah Streeter, analyst at Hargreaves Lansdown.
For its part, the yen fell by 0.20%, to 142.44 yen per dollar, on Monday, following its gains recorded in recent weeks.
The verdict from the Bank of Japan (BoJ) on its rates is expected on Tuesday.
Unlike other central banks, that of Japan maintains a so-called “ultra-accommodating” monetary policy in order to support the Japanese economy.
In early December, BoJ Governor Kazuo Ueda pushed the yen higher by noting that “his job would become more difficult at the end of the year”, a remark interpreted by the market as indicating that this position would be complex to maintain on the long term.
Another BoJ official had alluded to the end of the era of negative short-term rates, in place since 2016.
“There is only a small probability that the BoJ will exit the territory of negative rates this week,” said Ipek Ozkardeskaya, analyst at Swissquote, on Monday.
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