By Peter Nurse
Investing.com – The dollar is down on Monday, retreating after hitting a 16-month high as traders look for new signs of the Federal Reserve’s stance on the interest rate hike agenda.
At 9:05 a.m. (CET), the, which follows the evolution of this currency against a basket of six other major currencies, fell 0.1% to 95.073, falling from the 16-month highs recorded on Friday at 95,267.
The pair barely registered variations and remained at the level of 1.1449, just above Friday’s 16-month lows, registered at 1.1433, the pair rises 0.1% to 113.95, while the pair rises to 1.3416, recovering after recording lows on Friday at 1.3354, its lowest level this year.
The dollar hit highs of more than a year last week after it was learned that U.S. consumer prices rose last month at the fastest annual rate since 1990, casting doubt on whether the Federal Reserve can defend its theory that the This year’s inflation rebound will be temporary.
“Increasing price pressures require the Federal Reserve to be more flexible in dealing with potential outcomes,” explains Marc Chandler, chief market strategist at Bannockburn Global Forex. “The pace of tapering is the main limitation of monetary policy. The FOMC statements committed the Fed to reduce bond purchases by $ 15 billion in November and December. Although it anticipated that the pace would continue, it reserved the right to do so. rate adjustment. Attention is likely to turn to this in the run-up to the mid-December meeting. “
Before that, the most anticipated US economic data this week is Tuesday’s report, especially after Friday’s survey showed consumer confidence unexpectedly plummeted to a decade-to-decade lows. beginnings of November.
In addition, traders will be on the lookout for statements emerging from the virtual summit between President Biden and Chinese leader Xi Jinping to be held on Monday, given the tense relationship between the two world economic superpowers. XI attends the meeting after having consolidated his position at the top of the Communist Party last week in a meeting that could lead to an extension of his mandate. This would represent an important break with the precedents of the last 30 years. The pair rises slightly to the 6.3812 level, and the yuan remains at a three-year high, as annual growth in Chinese retail sales and industrial production for October beat expectations.
The strengthening of the yuan also gives the People’s Bank of China more leeway to cut its minimum reserve requirement, a move that analysts say is increasingly likely given the tensions in the country’s real estate sector.
On the other hand, ECB President Christine Lagarde will appear before the European Parliament later on Monday, and it is unlikely that she will change her prudent political stance in a context of a slowdown in the economy and an increase in Covid cases.
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