Chile: Dollar rises $15 and surpasses $970 due to inflation, middle-east tensions

The initial scenario predicted by the market for US monetary policy has shifted due to inflation data that exceeded expectations.

On Friday, the dollar surpassed $960 as investors worldwide sought refuge amid growing uncertainty about whether the Federal Reserve will actually lower interest rates this year. This is compounded by the fact that Israel is reportedly preparing for a direct attack from Iran in the coming days.

The local currency jumped $15 to $970.9 – session highs – on market quotations before noon, indicating a bullish weekly balance. Dollar purchases proliferated globally, with the dollar index rising 0.67% to 106 points, its highest level since early November 2023.

The dollar in Chile rose despite the fact that Comex copper climbed 0.46% to US$4.27 per pound, having reached a peak of $4.36 overnight after March trade balance figures in China, but losing momentum around noon.

Doubts about whether the Fed will cut rates this year are complicating the scenario further, after US CPI data showed signs of persistent inflation on Wednesday.

Furthermore, the fact that it is Friday and agents do not want to be exposed to possible geopolitical events over the weekend also influences. The dollar worldwide is responding to an escalation of geopolitical tension because if other countries enter the war between Israel and Hamas, this could escalate much more than we think. Indeed, investors are seeking refuge in the dollar and exiting equities.

Agents are also seeking refuge in bonds, causing interest rates to fall, and in gold bullion, pushing the metal to a new all-time high. Brent crude oil surged more than 2% to $92 per barrel due to potential supply constraints in a zone of significant producers.