In the early trading of the Asian market on Monday (October 10), Beijing time, the dollar index performed strongly, and it is currently trading around 112.88. Last Friday's data showed that the U.S. non-farm in September was better than expected, suggesting that the Federal Reserve's Feder may stick to its aggressive austerity policy at the moment.
Data from last Friday showed that non-farm jobs in the United States increased by 263,000 in September, which is less than the previous value of 315,000, but is higher than the 250,000 commonly predicted by economists. In addition, the U.S. unemployment rate unexpectedly fell to 3.5% in September, below the previous and expected values of 3.7%.
Toronto ForexLive chief currency analyst Adam Button said: "Any sign of a weak U.S. economy will put a lot of pressure on the dollar, but the non-farm data certainly does not drag down the dollar."
Westpac strategist SeanCallow said that these data and the subsequent rise in yields are "a combination that is good for the dollar." This further shows that the US economy has not collapsed. This is just a little more convincing that the Fed will express the same view on interest rates over the next three weeks.
futures market pricing shows that traders believe that the US rate hikes by 275 basis points in November and the probability of hiking more than 150 basis points by May next year is close to 90%. In order to curb inflation, the Federal Reserve has raised its policy interest rate target range from near zero at the beginning of this year to the current 3.00%-3.25%, and said last month that there will be more significant interest rate hikes this year.
strategists said that the U.S. September inflation data to be released this week will also be closely watched and may prove to affect investors' expectations of the Federal Reserve. On October 13, the United States will release September CPI. The market expects the US September CPI annual rate to be unseasonably adjusted to 8.1%, slightly lower than the previous value of 8.3%. The market expects the US September core CPI annual rate to be unseasonally adjusted to 6.5%, slightly higher than the previous value of 6.3%.
Last Friday, the US dollar index hit a weekly high of 112.88, and finally closed up 0.46% to 112.77. The U.S. dollar index has risen about 18% so far this year.
Rising oil prices and geopolitical tensions also raise concerns about economic growth, putting pressure on currencies of European energy importers and even the growth-sensitive Australian dollar currencies.
The Australian dollar hit a two-and-a-half low of 0.6347 against the US dollar last Friday, and finally closed down 0.75% to 0.6360. The Australian dollar continued to be weak against the dollar in early Monday, hitting a two-and-a-half low to 0.6342.
euro closed down 0.54% against the US dollar last Friday at 0.9738. The energy crisis and the risk of recession are still the two key factors that drag the euro down.
Previously, OPEC+ agreed to cut supplies, and with the arrival of winter, the Ukrainian war also poses a threat to Europe's energy security. The market is waiting for Kremlin to react to the explosion and damage of the only bridge to Crimea .
Earlier last week, the pound jumped after the UK government abandoned plans to cancel the highest income tax rate, but then fell continuously. The pound closed down 0.65% against the dollar last Friday at 1.1085.
UBS said that the economic outlook for the UK may become clearer in the coming weeks and the pound may recover some of its lost ground. But before that, the government must come up with an economic plan that must gain widespread support among the Conservative Party and the people.
The UK government will announce a new medium-term fiscal plan on November 23, and the tax cut plan announced last month has caused market turmoil.
last Friday the dollar closed up 0.18% against the yen at 145.38. The dollar hit a 24-year high against the yen in September, prompting Japanese authorities to intervene to support the fragile yen.
However, the effect of the intervention of the Japanese authorities seems to be limited, the US dollar rebounded against the yen recently and is still trading at a high of around 145.46.
Monday key data and major events
Big events that need to be paid attention to on Monday: Chicago Fed Chairman Evans delivered a speech on economic outlook and monetary policy, IMF and World Bank held the 2022 fall annual meeting, until October 16 .
Summary of institutional views
1. TD Securities: The US dollar is expected to rise to 1.40 or even higher this year
① The latest remarks of Bank of Canada Governor McClum resist the expectation of a dovish turning point, which should strengthen the bank's probability of 50 basis points hike in October, but we are unwilling to make further inferences, because in the current environment, especially as economic data begins to cool down, the validity period of the central bank's remarks is very short. We still expect the terminal interest rate to be 4.25%;
②McLum made some tough remarks, but failed to convince people. It sounds like they are reluctant to "turn" yet, but it may not be too far away. We are more convinced that we should buy the US dollar against the Canadian dollar on a dip. The exchange rate is currently expected to hit 1.40 this year, but this does not mean that this will be a top
2. When will the strong US dollar peak? Haitong Securities : We should focus on tracking US inflation indicators
①Haitong Securities pointed out that the core contradiction in the recent market is US liquidity, and the core of US liquidity is US inflation, so the core external variable of the market is US inflation. The slight weakening of economic indicators, even if the unemployment rate rises slightly, is no longer so important;
② Under such a background, if the interest rates of US dollar and US bonds remain high, global risky assets may still be under pressure. Faced with high inflation that has not been seen in 40 years, we should still focus more on tracking the US inflation indicators. If there is a significant decline, the market pressure will also be significantly alleviated
3. UBS: If the Bank of Japan adjusts its policies, many national bond markets may face a huge impact
① According to UBS Group, the Bank of Japan's policy adjustments will boost the yen and hold a large number of positions in Japanese investors 's bond market, namely Australia, France and the United States, caused a huge impact;
② The Swiss bank said that the more extreme situation is to abandon the yield curve control. Although it is unlikely, this will cause the Japanese stock market to enter a bear market and may cause the US and European stock markets to fall by 10%
4. UBS: Britain faces political challenges, and the British pound may remain weak
①UBS said that the UK faces political challenges and the pound may continue to struggle in the short term. Although the pound has obvious upward potential, given that the pound is currently at a low level, it is recommended to reduce its exposure to the pound;
②UBS warned that the downward potential of the pound is also high given the concerns about fiscal policy
5. Canadian Imperial Commercial Bank : GBP is expected to be against the US dollar before the end of the year 1.08
will be tested again ① The lack of fiscal credibility and the Bank of England's more radical austerity tendency in 2023 have dragged down the country's economic growth (the UK terminal interest rate is currently set at more than 4%) emphasizes the ongoing headwinds faced by the pound;
② Due to the Bank of England being forced to intervene in the major imbalance in stabilizing the bond market, it is expected that under the ongoing fiscal and political pressure, the currency will continue to become a widespread pressure release valve. Therefore, the recent rise in the pound may soon stagnate, facing the risk of testing 1.08 again before the end of the year
6. Deutsche Bank: The energy crisis is still a burden to the euro, and the euro may fall to the range of 0.92-0.91
①On October 6, Commerzbank responded to OPEC's decision to cut production in the middle of this week to push up oil prices, saying that this allows the crisis to continue, and this crisis "still is a burden to the euro";
② The outlook for the euro is still challenged, and it is unlikely to turn around in the short term. Analysts at Credit Suisse said that the euro may fall to the range of 0.92-0.91
7.Bank of the United States lowers the forecast of the New York dollar against the U.S. dollar from 0.65 to 0.56
①Bank of the United States lowers the forecast of the New York dollar against the U.S. dollar as of the end of 2022 from the previous 0.65 to 0.56. The recent situation makes the exchange rate return to 0.60 in 2022;
② Weak global economic growth and financial market conditions indicate that the exchange rate may fall below our end-of-year expectations in the short term.
This article is from Huitong.com
