The dollar fell back on Monday, undermined by the prospect of a decrease in rates of the Federal Reserve (Fed) on Wednesday, while the euro ultimately reacts little to the demotion of the sovereign note of France. Around 6:20 p.m. GMT, the greenback released 0.32% against the single currency, at 1.1771 dollars for one euro and 0.39% against the British currency, at 1.3608 dollars for a book.
The trades wait before the meeting of the Fed Monetary Committee (FOMC) which is to take place on Tuesday and Wednesday. “The markets are preparing for a rather accommodating scenario”comments with AFP Eric Theoret, of Scotiabank. Fed guiding rates have been between December 4.25%and 4.50%since December, inflation in the United States that remains significantly higher than the long-term target set by the Fed (2%).
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But the latest official employment reports seemed to convince monetary officials that the urgency was now to fly to the help of the labor market. Analysts therefore expect a drop in rates by a quarter of percentage this week. “The markets anticipate an additional reduction of half a point by the end of the year, with a drop of a quarter of a point in October, then another in December”adds Mr. Theoret.
The «buck»One of the nicknames of the American currency also suffers from fears surrounding the independence of the Central Bank of the United States. Donald Trump wishes to change the governance of the institution in the hope of further influencing monetary policy and a vacant position in the Governors’ Council gives him the opportunity to set foot in the Fed this week.
In parallel, the euro seems little shaken by the degradation by the Fitch agency of the note of the French debt on Friday, from AA- to A+, sanctioning the country for its persistent political instability and budgetary uncertainties. “France’s budgetary difficulties should not deflect the euro of its upward trajectory”explain in a note the analysts of Brown Brothers Harriman (BBH). In question, according to them, they “Stay specific to this country and do not spread to the rest of the euro zone.” Gold – Refuge value par excellence – reached a new historic summit on Monday, at 3,685.64 dollars perce (31.1 g).
