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The dollar fell to the weakest level since early August as swaps traders increased their bets that the Federal Reserve will cut interest rates through next May.
The index Bloomberg Dollar Spot fell for the fifth consecutive day because recession fears and dovish comments from the Fed led investors to bet that the central bank will have to reverse its most aggressive tightening cycle since the 1980s.
The New Zealand dollar led gains among its Group of 10 peers after The country’s central bank warned that more increases could occur next yearwhile the yen strengthened to a two-month high as jitters over rising U.S. rates eased.
“The dollar remains vulnerable until we see a change in market expectations for the Federal Reserve and that may be a story in 2024,” Win Thin, global head of FX strategy at Brown Brothers Harriman & Co., wrote in a note. “With the dollar’s rally stagnant, some firm real sector data will be needed to challenge the current narrative.” moderate of the Federal Reserve.
Milei has a meeting with the US to seek support in Argentina’s economic restructuring
Argentine President-elect Javier Milei met with US officials days before his inauguration as the libertarian seeks to gain support for his plans to fix the economy devastated by the crisis.
Milei met with National Security Advisor Jake Sullivan and senior officials from the National Security Council and the State Department, including Under Secretary of State for Western Hemisphere Affairs Brian Nichols. Likewise, the economic advisor Luis Caputo and the campaign director Nicolás Posse held talks with the International Monetary Fund and the Treasury Department.
Argentina is preparing to restore its agreement 43 billion dollar loan with the IMF, which has been diverted under the current government. At the same time, Washington is increasingly concerned about China’s influence in Argentina, which has used funds from Beijing to overcome its most recent economic crisis.
The meetings were organized with the help of the United States ambassador to Argentina, Marc Stanley, to help the incoming president explain his economic plan, Milei’s team said in recent days. Argentine businessman Gerardo Werthein, who is expected to be Milei’s choice as United States ambassador, also participated in the meetings.
“The president-elect expressed his vision on the international geopolitical agenda aligned with the West and his defense of the values of freedom,” his team said in a statement in X. Sullivan, of the NSC“expressed the willingness of the United States to collaborate in the transition of the incoming Argentine government in the face of the challenging political situationeconomic and social that the country is going through.”
The IMF said in a statement that the discussions included “the country’s complex challenges and plans to urgently strengthen stability and lay the foundations for more sustainable growth.” “Both teams will remain closely engaged in the coming period.”
The NSC later said in a statement that Sullivan and the Argentine president-elect discussed economic matters, as well as “shared priorities such as investing in technology and clean energydefend human rights and defend democracies around the world.”
Despite the seriousness of the mission, Milei also had time to act as a tourist and stopped to take a selfie at the Lincoln Memorial with his sister and a couple of advisors.
Javier Milei’s economic plans as president of Argentina
Milei’s team believes that support from the United States and the IMF could help ease his transition to leadership and avoid further political and economic obstacles when President Alberto Fernández takes office on December 10, according to a person familiar with the situation.
Milei has described his plans for the Argentine economy as “shock therapy,” which includes sharp spending cuts and attempts to privatize some companies states in an attempt to avoid hyperinflation.
During his campaign, Milei proposed that the country will abandon its currency in favor of the US dollar and close the central bank, although he has distanced himself from those plans since winning the election. He also brought in Caputo, a Wall Street veteran and former finance and central bank chief, to lead the economic transition team.
Milei has several candidates to head the central bank, but he wants to make sure his election works well with whoever he chooses to lead the Ministry of the Economyaccording to people familiar with the discussions, who asked not to be identified without permission to speak publicly.
Treasury Bonds in the US rebound, and hit the dollar
Treasuries continued their November rally as expectations grew that the Federal Reserve has ended policy tightening and could begin cutting interest rates next year.
The US currency fell for the fifth day in a row, but its losses have since narrowed against some of its Group of 10 peers and emerging market counterparts. US stock futures rose while European contracts were flat, following a mixed session in Asia.
“Attention will now turn to Chairman Powell’s speech on Friday to see if the tone points to a clear turn towards flexibility“Daragh Maher, head of US currency strategy at HSBC, wrote in a note. “If this materializes, it would clearly be a challenge to our bullish view of the US dollar.”
The Bloomberg Global Aggregate Bond Index rose 4.9 percent in November and is headed for its best month since December 2008, after recent data indicated slowing inflation and weaker economic activity. The rally followed new dovish rhetoric from Federal Reserve officials and billionaire investor Bill Ackman’s bid for earlier-than-expected rate cuts.
The MSCI All Country World Stock Index has gained 8.8 percent so far this monthits biggest gain since November 2020.
2023-11-29 10:03:01
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