Last week, the market lacked heavy US economic data and risks. Factors such as US financial reports and changes in the UK's political situation dominated the foreign exchange market through market sentiment, but overall it was in a consolidation market and there was no obvious break. USD index hit a high of 113.94 and hit a low of 111.70, closing down 1.15% that week, still in the high consolidation range. HYCM Industrial Investment analysts believe that the upward foundation of the US dollar index is still solid, but the report on the last trading day of last week that the Federal Reserve may slow down the pace of rate hikes in and may be strengthened by the market, it may increase downward pressure on the US dollar index.
Fed officials overall maintained hawkish rate hikes last week, but there was a noticeable softening voice on the last trading day, which is a change worthy of close attention from investors. Originally it was the "new Fed news agency" Nick Timiraos said that the Fed may consider whether it will send a signal to reduce the amplitude of interest rate hikes in December. This was echoed by San Francisco Fed Chairman Daley.
Judging from the CME Fed observation tool, the market expects the Fed to raise interest rates by 75 basis points in November to be as high as 95%, but it is believed that the Fed's probability of 50 basis points in December is more than 56%, rather than 75 basis points in interest rates. HYCM Industrial Investment analysts believe that the Fed's interest rate hike is still leading the way in the main central bank , but the market has digested this. If market expectations for the Fed's 75 basis points rate hike in December fail to strengthen this week, pressure on the high-level pullback of the US dollar index may be strengthened.
Looking ahead this week, the United States will release a new round of Markit manufacturing and service industry PMI data, among which the price and employment sub-items should be focused on. If the data show that inflationary pressure in the United States is still increasing, it will benefit the dollar and vice versa. In addition, the United States will also announce the third quarter GDP. Previously, the United States' GDP recorded negative values for two consecutive quarters and fell into a technical recession. The market generally expects the annualized GDP rate of the United States to grow by 2.1% in the third quarter. If the US economy performs less than market expectations, it will strengthen expectations that the Fed will slow down interest rate hikes, which is not conducive to the US dollar.
In terms of market sentiment, US listed companies will also release intensive financial reports. Judging from the situation last week, the good and bad are mixed. The better-than-expected financial reports will boost market sentiment, and the US dollar index, which lacks promotion, falls into adjustment; and the deterioration of market sentiment will help the US dollar index stabilize. In addition, the impact of who will win the new British Prime Minister will also be transmitted to the world through the British Treasury market, because the British Treasury market is still an irregular time bomb. Currently, former British Finance Minister Sunak is more likely to win the Prime Minister's election, and the British pound sentiment is stable.
Outside the United States, the Bank of Japan and the European Central Bank interest rate resolutions this week may also affect the direction of the US dollar index from the outside. The Bank of Japan insisted on controlling the yield curve and insisted on buying Treasury bonds after the US dollar/yen broke through the 150 mark up. However, the trend of the yen exchange rate last Friday implies that the Japanese authorities have interfered in the foreign exchange market, and it is not ruled out that there will be related actions in the future. Whether the Bank of Japan can withstand the pressure as the market continues to bet on its turn may trigger further violent fluctuations in the yen this week. The yen accounts for only the second largest proportion of the euro in the US dollar index’s currency package, and the sharp fluctuations in the yen may also be reflected in the US dollar index.
The ECB's interest rate decision may be relatively distorted, because the ECB may not make any unexpected moves. The current market expects the European Central Bank to raise interest rates by 75 basis points. Only when an accident occurs in the ECB can it promote a larger market in the euro and drive the US dollar index.
Technically, the overall weekly chart of the US dollar index has maintained an upward momentum since May last year. Last week, it still failed to stabilize above 113. After briefly exploring this level, it fell back and included a larger physical negative line with the shadow line of . The stochastic indicator tends to further decline, and further upward space may be limited. Pay attention to MA10 support in the short term. If stabilized, it may maintain a high fluctuation above the line, but if it breaks down, a deep pullback may occur, pointing to support around 110. The daily chart has been blocked twice, but the downward movement is limited, and the short-term pullback is slightly seen. In summary, there is a risk of volatility slightly downward this week.As the last full week of October, if the closing negative, it will enhance the possibility of the final value of the four consecutive upward trends on the monthly chart, thereby enhancing the risk of a pullback.
This article comes from the financial world
