The United States economy is the most heavily weighted variable in the dollar’s movement. On Thursday, it was revealed that inflation in that country accelerated towards the end of 2023, challenging market expectations that the Federal Reserve would start cutting interest rates soon. Reference image.
Photo: Bloomberg Agency
In the first week of 2024, the dollar remains on the border of $4,000, with several pesos below this figure. This Friday, January 12, expectations for the currency’s behavior were driven by the release of inflation data in the United States, which showed the consumer price index not falling at the expected pace.
The dollar remained closed at its value $3,893 This Friday, January 12, which translates to a decrease of $34 compared to the close of last Thursday, January 11 ($3,927).
For its part, the Representative market rate (TRM), set by the Financial Superintendent of Colombia for this Friday, January 12, is $3,929.79. This is a decrease of $16.6 from the previous day. Additionally, the current TRM is down $818.75 from a year ago (January 12, 2023) and down $52.71 from a month ago.
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The United States economy is the most heavily weighted variable in the dollar’s movement. On Thursday, it was revealed that inflation in that country accelerated towards the end of 2023, challenging market expectations that the Federal Reserve would start cutting interest rates soon.
According to government data, the consumer price index closed at 3.4% in 2023 after the biggest increase in three months. Monthly variation was also higher than expected.
Core inflation (which excludes food and energy prices) rose 0.3% in December from the previous month. In annual terms, the so-called underlying index rose 3.9%. Economists prefer the underlying index because they consider it a better measure of inflation trends than the headline CPI.
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Figures from the Bureau of Labor Statistics showed increases in housing, electricity and motor vehicle insurance prices. Used car prices rose for a second month, defying expectations of a decline. Despite the rebound, the figure marked a year in which inflation generally eased without much damage to the labor market, paving the way for the Fed to cut borrowing costs this year.
In their latest economic forecasts, officials expect three rate cuts in 2024, although authorities have played down market expectations that the first cut could come in March.
Treasury yields and the dollar rose, while stock index futures fluctuated after the report. The Fed’s next rate meeting is later this month.
The premise of the value of the dollar is that the more greenbacks there are in circulation, the lower their value, so what happens to the dollar? Fed will be decisive. For this year, the dollar is expected to remain relatively low, below the $4,000 barrier. It is likely, according to experts, that the $3,800 threshold will be reached again. However, all these predictions are subject to the extent to which the world has noted variables that could affect the shortage, such as the escalation of conflict on the Ukraine and Gaza border, in addition to other geopolitical tensions. and commercial.
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