On December 19, the central parity rate of RMB against the US dollar was reported at 6.9746, an increase of 45 points.
Highlights this week: The release of key U.S. inflation indicators
There is a lot to watch this week. Many countries will update the final value of third quarter gross domestic product (GDP) data, and the British economy is expected to shrink. The U.S. personal consumption expenditures price index (PCE) in November may affect the outside world's judgment on the policy path. High interest rates are expected to continue to impact real estate sales and construction data. The market is expected to observe the economic slowdown trend from indicators such as U.S. consumption and income growth, and the monthly rate of durable goods orders. As for the central bank, although the inflation rate has exceeded 3%, the Bank of Japan is expected to keep interest rates stable and maintain its dovish guidance. The recent rebound in the yen has also caused speculation about adjustments to the yield curve control policy. As inflation recedes, Türkiye's central bank is expected to stay on hold.
The probability that the Federal Reserve will raise interest rates by 25 basis points in February next year is 75%
ME "Fed Watch": The Federal Reserve will raise interest rates by 25 basis points in February next year to 4 The probability of a .50%-4.75% range is 75%, the probability of a 50 basis point interest rate hike is 25%; the probability of a cumulative 25 basis point interest rate hike by March next year is 30.7%, the cumulative probability of a 50 basis point interest rate hike is 54.5%, and the cumulative probability of a 75 basis point interest rate hike is 14.7%.
CICC : Outlook for the U.S. Dollar Exchange Rate in 2023
Looking back at history, a typical trend shift in the U.S. dollar is often accompanied by the expansion of the global financial cycle . On the one hand, this requires the Federal Reserve's loose monetary environment, and on the other hand, it requires initial signs of stabilization of the global economy. Looking forward to 2023, under our baseline assumptions, high interest rates will drive demand contraction in the United States, which will end the Fed's monetary tightening cycle on the one hand, and increase risks to financial stability on the other. We believe that at some stage in the first half of next year, the market's trading theme may change from the Fed's turn to economic recession and financial stability. The US dollar will benefit from the risk aversion logic and the trend will recur. This may also be the last rise of the US dollar. Entering the second half of the year, with the end of the Fed's tightening cycle, the European and American economies may gradually begin to show some preliminary signs of recovery, and we expect that market concerns about financial stability will also begin to gradually ease. When the economy and financial markets initially stabilize, the market's trading focus may shift from recession to recovery, and the U.S. dollar will also start a trend downward cycle.
