Benefited from the Federal Reserve's interest rate hikes were in line with market expectations and Chairman Powell's slightly softened attitude in his speech, the US dollar weakened against major currencies. The US dollar index once fell below the 105 and 104 levels during the session. The RMB rose against the U.S. dollar this week, but as market uncertainty remains high and safe-haven demand caused the U.S. dollar to recover some of its previous losses, the RMB exchange rate against the U.S. dollar also gave up some of its gains and is currently competing at the 6.7000 mark.
The Federal Reserve announced an interest rate hike of 75 basis points in the early hours of Thursday morning Beijing time to combat inflation. This is the Fed's most aggressive rate hike since 1994. The Fed said in its statement that inflation remains elevated, reflecting supply and demand imbalances related to the COVID-19 pandemic, rising energy prices and broader price pressures, and that the Committee is firmly committed to returning inflation to its 2% goal.
Fed Chairman Powell also said at the press conference after the meeting that the Fed "seems most likely" to raise interest rates by 50 or 75 basis points at the July monetary policy meeting. Powell's speech showed that the central bank is still committed to fighting inflation, but his tone is not as "hawkish" as in the past.
HYCM Industrial Investment (UK) analysis team said, "After the release of the U.S. CPI data in May, the market generally believes that the Federal Reserve is very likely to take more radical measures to curb price increases, and the market even expects to raise interest rates by 100 basis points at a time. Therefore. After the Federal Reserve announced a 75 basis point interest rate hike, it was basically in line with market expectations, causing the US dollar to fall instead of rising. US stocks and other risk assets did not fall. However, as other central banks around the world adopted more aggressive policy stances, market sentiment on Thursday It seems to be getting worse again. "
In terms of the U.S. dollar, the level of U.S. and global inflation and the Fed's interest rate hikes measures will continue to be the decisive factor in the trend of the U.S. dollar in the next few weeks. Although Federal Reserve Chairman Powell said that the fundamentals of the U.S. economy are solid and there are no signs of a broad-based economic slowdown, in fact, recent economic data has not been as solid as he described, and investors are increasingly worried about raising interest rates or tightening policies. It will have a major impact on the market.
HYCM Industrial Investment (UK) analysis team said, “After the Federal Reserve Chairman Powell said that raising interest rates by 75 basis points will not become the norm, the dollar fell because Powell was not as hawkish as the market expected, and investors poured money into those who followed up. The Federal Reserve has raised interest rates, but the risk aversion sentiment in the market is still relatively strong, which has provided some support for the US dollar, but it is not sure whether the US dollar has the momentum to rise further. "
Next Monday, the US market will be closed for a public holiday. Be wary of market fluctuation risks. In addition, next week the market will focus on Federal Reserve Chairman Powell’s testimony on the semi-annual monetary policy report before the House Financial Services Committee, as well as Cleveland Fed President Mester, Richmond Fed President Barkin, Chicago Fed President Evans and others. Economic and Monetary Policy Speech. The market lacks important economic data next week and will mainly focus on data such as the number of initial jobless claims in the United States for the week ending June 13, the U.S. Markit manufacturing PMI in June, and U.S. new home sales in May.
In terms of RMB, after rising for two consecutive trading days, the RMB exchange rate gave up part of its gains after the Federal Reserve raised interest rates, and fell back below the 6.7000 mark against the US dollar. The Federal Reserve's aggressive interest rate hike policy has put further pressure on the RMB exchange rate, but the room for decline is expected to be limited.
HYCM Industrial Investment (UK) analysis team pointed out, “As U.S. bond yields will rise, the inversion of the interest rate differential between China and the United States will continue to expand, and the appreciation of the U.S. dollar will continue to put depreciation pressure on the RMB. After the Federal Reserve raises interest rates, the U.S. dollar will continue to expand. Strengthening, the global currencies will weaken relative to the US dollar, which is a problem faced by the international community. However, we can see that as the European and American stock markets plummeted, international funds poured into Hong Kong stocks and A shares . RMB asset prices have been rising recently, and the RMB exchange rate is expected to receive some support. "
Against the backdrop of the Federal Reserve raising interest rates, shrinking its balance sheet, and tightening financial conditions, the U.S. dollar is likely to remain strong, which will naturally have a negative impact on the RMB and other non-U.S. currencies. A certain amount of pressure.However, as China's economy continues to stabilize and foreign trade remains resilient, RMB assets are still attractive, supporting the RMB exchange rate to remain at a balanced level. Two-way fluctuations will become normal. The RMB is expected to continue to hover in the 6.50-6.90 range against the US dollar in the short term.
From a technical point of view, it shows a steady trend above the zero axis of the MACD column line, which indicates that the US dollar will still receive support. The trend of RSI indicator is flat in the neutral zone, and the exchange rate may fall into range consolidation in the short term. Currently, USD/CNY has effectively broken through and stood on the 200-day moving average and the downward trend line formed in April 2021. USD/CNY found strong support at 6.6291, the 61.8% Fibonacci retracement of the February low to May high. In the upward direction, the resistance is at 6.7175, 6.7250 and the previous high of 6.7309; in the downward direction, the support is at 6.6915, 6.6830 and 6.6745.
This article comes from the financial world
