CICC reported on June 18th , the most touching thing this week is the Federal Reserve policy meeting. As expected, the Fed raised interest rates for the second time in three months, with the target range of the federal funds rate raised by 25 basis points to 1.00-1.25%, and is expected to raise interest rates again this year, indicating that the Fed is basically not affected by the uneven economic data in recent times.
The Fed also released a clear outline of its first $4.2 trillion Treasury and Mortgage-backed Bonds (MBS) portfolio plan. As soon as the US dollar shrank its previous downturn, it immediately rebounded from a seven-month low. "The message from the Fed is that they have not reacted excessively to CPI and retail sales data. This is basically equivalent to suggesting that they will move forward at full speed, and the dot chart shows that they expect to raise interest rates again this year. This is a hawkish expectation, so the dollar has recovered a lot of lost ground earlier."
But the road to rising USD is still showing up. The Fed announced its policy decision, weak retail sales and inflation data released by the United States cast a shadow on confidence in the continued growth of the U.S. economy. In addition, the Washington Post said that the US President Trump was investigated by Special Attorney Mueller for suspected obstruction of justice, and the market is worried that the political turmoil will escalate. These factors dilute the boost the interest rate hike has brought to the dollar.
weak data hit the dollar again on Friday. The dollar fell on Friday, giving up most of the previous day's gains, sparking risk aversion to U.S. assets as weaker-than-expected housing starts and consumer confidence data.
Disappointing economic data and the slow progress of the U.S. government's fiscal stimulus plan have overwhelmed the boost the Federal Reserve may raise interest rates further.
The U.S. Department of Commerce announced on Friday (June 16) that housing starts fell by 5.5% in May, down by the third consecutive month, hitting an eight-month low. The University of Michigan said that US consumer confidence fell in early June.
Silicon Valley Bank's senior forex trader Minh Trang said, "This has aroused doubts about the growth of the United States for the rest of the year."
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