The DXY index, which measures the dollar against a basket of strong currencies, posted modest gains on Thursday, the seventh, after fluctuating during the day. In Europe, the euro showed weakness, after data from the German economy and in the minutes of the European Central Bank (ECB) meeting, and the pound strengthened, after the Prime Minister of the United Kingdom, Boris Johnson, announced that he would do so. Leave the opposite.
In the late afternoon in New York, the dollar rose to 136.02 yen, the euro fell to 1.0163 dollars, and the pound fell to 1.2027 dollars. The DXY index closed up 0.03% at 107,130 points.
The British currency has been in the spotlight, gaining traction after Johnson said he would step down, just while a successor is chosen from within the Conservative Party. In Capital Economics’ assessment, the prime minister’s resignation could lead to tax cuts in the country. For its part, Oxford Economics believes that the pound should come under more pressure, given the current political situation in the country. NatWest, in turn, says it sees greater opportunity for financial slippage and more gold bond issuance, and also expects the Bank of England (BoE, for its English acronym) to continue raising interest rates. The bank says that political developments are positive in the short term for the pound, but it expects risks for it, such as a violent dispute over the leadership of the ruling party and, ultimately, the chance of early elections depending on the political scenario that emerges. .
The euro in turn fell on the day of the release of the minutes of the European Central Bank meeting. Leaders expressed concern about inflation in the eurozone, but also argued against excessive and too rapid tightening, due to its potential negative effects. On the docket of indicators, industrial production in Germany grew 0.2% in May compared to April, less than analysts’ expectations for a 0.3% increase.
Among emerging currencies and commodities, the dollar rose to 79,193 Indian rupees, from 79,041 rupees late yesterday afternoon. India’s central bank has announced measures to try to contain the decline of the local currency, as well as increase its foreign exchange reserves.
In a report to clients, Capital Economics estimates that there is still room for the dollar to advance through the end of this year. The consulting firm believes that the US economy will retain some strength, resulting in a better performance than most other major economies, while the Federal Reserve (the Federal Reserve, the US central bank) will tighten more aggressively than other central banks. With riskier assets continuing to come under pressure as the global economy slows, demand for the safety of the dollar will remain supported, Capital believes.
Today, among the Fed leaders, Director Christopher Waller and James Bullard (St. Louis County Chief) spoke of supporting a 75 basis point increase at this month’s central bank meeting.
See the rates of the major currencies:
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