By Peter Nurse
Investing.com – The dollar gains positions this Wednesday, benefiting from the robust retail sales report of the previous day, while the British pound rises after the publication of the inflation report pointed to a rise in interest rates from the Bank of England in December.
At 8:55 a.m. (CET), the, which tracks the evolution of this currency against a basket of six other major currencies, rises 0.1% to 95.938, having previously reached 96.267 for the first time since July of last year.
The pair fell 0.1% to the level of 1.1313, after registering a 16-month low at 1.1263 dollars, while it rose 0.1% to 114.88, reaching the level of 114 , 97, its highest level since March 2017.
The latest driver for these dollar gains was the release of surprising US retail sales data on Tuesday, which rose 1.7% in October.
This added to the momentum generated last week by those, who have risen at their highest rate since 1990, which could encourage the US Federal Reserve to accelerate the reduction of its asset purchase program, probably moving the calendar forward. of interest rate rises.
St. Louis Fed Chairman James Bullard added fuel to the fire by stating Tuesday that the central bank should “veer in a more aggressive direction” in its upcoming meetings.
At the same time, the president of the European Central Bank, Christine Lagarde, this week rejected the idea that her central bank is going to raise interest rates in the near future, warning that tightening monetary policy now to curb inflation could stifle the recovery of the eurozone.
“In our opinion, the euro remains exposed to the downside,” ING (AS 🙂 analysts say in a note, “and our short-term fair value model shows that a move below 1.1300 would be consistent. with changes in the main drivers: mainly the spread on short-term swaps, but also the relative shape of the curve, the relative performance of stocks and the interest in risk globally. “
Elsewhere, the pair rose 0.3% to 1.3463 after UK inflation soared to 10-year highs last month, consolidating expectations that it will raise interest rates on next month, which would make it the first G7 central bank to do so since the pandemic.
They rose 4.2% in annual terms in October, a rise higher than expected, and a significant jump from the 3.1% rise in September.
This occurs the day after the release of better-than-expected UK employment data, even after the completion of the Government’s work permit scheme to protect employment.
The pair is down 0.1% to the 0.7300 level, and the Governor of the Reserve Bank of Australia, Philip Lowe, has again spoken out against the 2022 rate hike that they take for granted in the market.