The Colombian peso loses traction in front of the US dollarconsolidating within the operational range of the previous session.
He USD/COP He reacted upward from March 26 at 4,123.11, finding buyers who promoted parity to maximum of April 1 in 4,182.80.
At the moment, the USD/COP rises 0.20% dailyoperating about 4,158.52.
The Colombian peso loses ground after the US ADP Employment Report with an eye on Trump’s tariff announcement
- The United States private sector registered an increase in 155,000 new positions in March, according to the United States ADP Employment Report. This figure exceeds 105,000 expected positions and the 84,000 observed in February.
- After this news, the dollar index (DXY) falls 0.21% in the day, reaching minimum of March 31 in 103.93.
- The look of the operators will be concentrated in the Tariff advertisement that will make today the president of the United States, Donald Trump. The consensus expects to impose reciprocal tariffs on its commercial partners, intensifying volatility in financial markets.
- In this context, the Colombian weight operates in the loss zone, while the USD/COP wins 0.20% on Wednesdayremaining within the operational range of the session on Tuesday.
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
