Chile: Dollar rises more than $10 and remains above $950 in early afternoon

The dollar index surged to its highest levels since November, as CPI data came in a tenth higher than expected across all major series.

The dollar was trading above $950 on Wednesday, after the U.S. reported better-than-expected consumer price data for March. The figure led traders to postpone expectations of an interest rate cut by the Federal Reserve until September.

The parity was up $ 11.69 to $ 953.8 in the early afternoon in the Chilean exchange market, after having jumped to a peak of $ 960 around 10:00 a.m., according to the sellers’ points of the Bloomberg series.

The dollar index advanced 1.04% to 105.23 points and the two-year Treasury rate took off 22.2 basis points (bps) to 4.97%, both reaching their highest level since mid-November. Meanwhile, Comex copper fell 0.2% from its recent highs to US$ 4.28 per pound. Wall Street, meanwhile, traded with losses.

The March CPI was one-tenth above estimates in all the main series, marking a reacceleration in the cost of living and a stabilization of core inflation – excluding food and energy, the most volatile items – at 3.8% annual levels.

The most disappointing data for supporters of ‘inflationary moderation’ are the persistently high core non-housing services figures (around 0.65% per month), driven by high figures for auto services and medical services, and the rebound in the food away from home category.

The start of the Fed’s rate-cutting cycle could very well be postponed and have fewer reductions during 2024.In fact, the market is already correcting its expectations and anticipates only two cuts this year, starting in September. At the local level, this has (upward) impacts on the dollar.