Dollar rises, service activity advances in US – 05/12/2022 at 18:02

The dollar rose on Monday as the services sector saw its activity rise more than expected in the United States in November, pushing the dollar away from a more than five-month low against the euro.

Around. By 16:45 GMT (17:45 Paris), the dollar was up 0.23% at $1.0511 per euro after falling earlier in the session to $1.0585, its lowest since late June.

The service sector grew more than expected in November in the United States, driven by business activity and a rising employment level, at the start of this year’s holiday season, the union said on Monday. professional ISM.

“The risk remains high that interest rates (US central bank governors, note) will end up at a higher level than currently expected,” comments Edward Moya, analyst at Oanda.

The dollar had fallen earlier in the session, suffering from its safe-haven status as several Chinese cities, including Beijing and Shanghai, eased their health rules, a week after protests, reducing the risk of a slowdown. serious activity in the world’s second largest economy.

The Chinese yuan, whose exchanges are not continuous because they are regulated by authorities, rose 1.31% to 6.9625 yuan to the dollar, a close not seen since September.

But traders remain focused on the trend in US economic activity and the impact it could have on Fed policy.

On Friday, the strength of the US jobs report was not enough to support the dollar over time.

In the current context of rising prices, labor market dynamism is likely to encourage the US Federal Reserve (Fed) to continue raising interest rates rapidly to cool activity and lower inflation, leading to an appreciation of the dollar.

A few days earlier, the head of the Fed Jerome Powell had also predicted a slowdown in interest rate hikes, after several consecutive tightenings of 75 basis points, from the meeting in mid-December.

“Markets currently believe that the Fed will start cutting interest rates as early as mid-2023. On the contrary, they expect the European Central Bank (ECB) to continue raising interest rates throughout 2023,” explains Carol. Kong, analyst at the Commonwealth Bank of Australia.

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