When money is tight as investors expect to grow
The dollar stays at a high point without any profit against its peers’ basket in nine months, after traders turned their hopes on global growth in April and pushed the change down for four consecutive weeks.
The rest followed a strong stabilization in March, as strong US economic downturn raised hopes that inflation would force the Federal Reserve to cut its inflation target, raise yields and pull the dollar above other major currencies.
But indicating that investors think the global economic recovery may not be in jeopardy, the dollar index fell 2.7% of its monthly price to sell for $ 90.98 when the tightly linked inflation rate plummeted. The euro rose 3 percent to sell for $ 1.20 and the real Brazilian came out as the best currency of the month.
Even the euro economic collapse in the first quarter, researchers expect that the incidence in the bloc will gradually increase as vaccine programs mature and the economy reopens.
“The return of” global “and not” US “sales is the main reason we showed the amount of dollars lost in April,” said Kamakshya Trivedi, a technical expert at Goldman Sachs.
“In the coming months, we need to start looking at restrictions on European Covid, and we expect the benefits of oil and copper to continue – which should keep the dollar behind,” he added.
Wednesday, chairman of the US central bank Jay Powell he wanted to allay fears of an immediate end to the Fed’s monetary policy program, emphasizing that negative trends are about to be addressed.
“Money is for a protection. We doubt that this is the case, but we should consider it a matter of urgency, “Bank of America researchers said in a statement.
Data released in the first quarter showed that the gap between growth rates in the US and Europe remains large, while the eurozone is down 0.6% while the US closed 1.6 percent growth in all of its household items.
Silvia Dall’Angelo, an economist at Federated Hermes, said the US economy should do well in the next two years but the eurozone “should start working again in the third quarter”, making the dollar less attractive once it does.
Some researchers remain skeptical, however. Win Thin, the global financial director at Brown Brothers Harriman, said the euro share could not match the US economic growth this year, which would cause the Fed to start buying its products in Europe.
“One of the things that has been mentioned about the recent strength of the euro is that I still expect the economic gap to decline in Q2 and beyond. However, we do not see it, ”he said. “The ECB should continue to buy things for a longer period of time than expected.”