Home » Lao Zheng said that foreign exchange|Doves are getting stronger and the US dollar is weak and volatile_JPY_Expectations_Prices

Lao Zheng said that foreign exchange|Doves are getting stronger and the US dollar is weak and volatile_JPY_Expectations_Prices

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Lao Zheng said that foreign exchange|Doves are getting stronger and the US dollar is weak and volatile_JPY_Expectations_Prices

Original title: Lao Zheng said about foreign exchange|Doves are getting stronger and the dollar is weak and volatile

Every reporter: Zheng Buchun Every editor: Wang Keran

The dollar, which fell on weaker-than-expected inflation, did not improve this week and remained weak. This week, the market has further lowered expectations for the Fed’s future peak interest rate hike due to a number of factors, which obviously put pressure on the dollar. However, there are still some variables for the dollar this week, including the US personal income and expenditure and corresponding price indicators released on Thursday night, and the non-farm employment data to be released on Friday.

It is worth mentioning that every AI newsletter shows that on December 1, the core PCE price index in the United States in October increased by 0.2% month-on-month, which is the smallest increase since July 2022. It is expected to be 0.30% and the previous value is 0.50%. The core PCE price index in the United States in October increased by 5% year-on-year, expected to be 5.00%, and the previous value was 5.10%.

Powell hints at slowing rate hikes

11In the first ten days of the month, the U.S. dollar fell back significantly, and has been weak and volatile since then. The U.S. dollar index fell 5.02 percent in November, its biggest monthly gain since September 2010. The U.S. dollar index continued to be weak this week. It rebounded slightly on Monday and Tuesday, but fell back significantly on Wednesday and Thursday. As of around 19:00 Beijing time on Thursday, the U.S. dollar index was temporarily at 105.59 points, and it has temporarily fallen by 0.44% so far this week.

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The fall of the U.S. dollar on Wednesday was related to the lack of popularity of the U.S. dollar itself on the one hand, and also to some events and data. This was mainly due to the poor employment data of the U.S. ADP for November released that day, and the Federal Reserve Chairman Powell’s speech at the Brookings Institution in Washington. Lecture at the Hutchins Center for Fiscal and Monetary Policy.

In terms of data, the number of new jobs in the U.S. ADP private employment sector in November announced on Wednesday was 127,000, significantly weaker than the expected increase of 200,000, and far weaker than the increase of 239,000 in October.

In terms of Powell’s remarks, he said in his speech: “Restoring price stability will likely require policy to be kept at restrictive levels for some time. History has strongly cautioned against premature easing of policy, and we will stay the course until the task is done.” , progress in the fight against inflation has largely been insufficient, and small rate hikes are likely in the future.”

The above remarks are quite satisfactory and have no impact on the dollar. What is important is his following remarks:

Powell went on to say: “It makes sense to slow down the pace of rate hikes as we get closer to a constrained level sufficient to reduce inflation.” Powell even went so far as to say: “The time to slow down the pace of rate hikes may come as early as the December meeting. “

Obviously, Powell made a dovish statement, and the US dollar index was naturally under pressure. On Wednesday, the US dollar index fell 0.76% in a single day, giving up all the gains on Monday and Tuesday.

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Affected by economic indicators and the above-mentioned speeches, the market still believes that the Federal Reserve interest rate meeting on December 13-14 may raise interest rates by 50 basis points, and this has not changed. However, some changes have taken place in the market’s expectations for the peak interest rate in this round of interest rate hike cycle. Markets had believed that U.S. interest rates would rise to 5.1% next year, but now only expect a rise to 4.95%.

Yen Retaliatory Gains

The yen has rebounded significantly recently. Even if it is not possible to say whether it will be extremely prosperous for the time being, at least there may be some signs. The dollar fell 7.19 percent against the yen last month, its biggest drop since December 1998. The yen has been extremely weak since March until it reversed course in October and is still down 18.49% so far this year.

For four days this week, the yen has appreciated every day. At the same time on Thursday, USD/JPY was temporarily at 136.41, down 1.98% so far this week. Among the major non-US currencies, the yen performed almost the best.

The main reason for the appreciation of the yen is that the Fed’s interest rate hike is closer to peaking. This is the key, because the pressure on the yen has long come from the interest rate differential between the United States and Japan.

In terms of Japan’s own economic fundamentals, it will naturally benefit from the decline in international oil prices and other industrial metals, because this means that the market’s view on Japan’s balance of payments tends to be optimistic.

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In terms of economic indicators, the price index in Tokyo, Japan, announced last Friday, rose by 3.8% year-on-year, significantly higher than the expected increase of 3.5%, and also significantly higher than the expected increase of 3.6%.

The recent appreciation of the yen is more due to the previous “excessive decline”, so once the factors supporting its decline weaken slightly, the retaliatory rebound will be enough to make the yen rebound sharply.

From the perspective of the general situation, the USD/JPY reached a maximum of 151.93 after breaking through the multi-year pivot of 120. The current trend should be regarded as a confirmation of a back step. Since the yen has only rebounded for more than a month, neither the time nor the magnitude can be counted in place There is a high probability that the yen will continue to rise for a while, and there is a high probability that the yen will rise to a position in the range of 130 to 120.

In terms of operation, if investors hold the yen, there is no need to rush to close their positions. They may wish to wait until it rises to 130 and then decide whether to advance or retreat according to the situation.

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Disclaimer: The opinions of this article represent only the author himself. Sohu is an information release platform, and Sohu only provides information storage space services.

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