Title: US Dollar Index Falls Below 100; Global Markets Soar
Date: July 13, 2023
The U.S. dollar index dropped below 100, leading to a surge in global stock markets, crude oil prices, precious metals, and non-U.S. currencies. This development comes as the year-on-year growth rate of CPI and PPI in the United States fell more than expected in June, indicating the Federal Reserve’s lack of support for further interest rate hikes. The U.S. dollar index hit a 15-month low, resulting in optimism across various markets.
Regarding economic data, the year-on-year growth rate of CPI in the United States for June fell below market expectations, marking a decline for 12 consecutive months. Additionally, the June producer price index (PPI) showed a minimal year-on-year increase of 0.1%, the smallest since August 2020, and lower than the anticipated 0.4% and previous value of 1.1%.
Global stock markets saw continued strength. At the time of reporting, the Nasdaq index rose by 1%, reaching a three-month high. Germany’s DAX index and France’s CAC40 index also rose by nearly 1% and hovered near historical highs. Among the Asian stock markets that had already closed, the Shanghai Composite Index surged by 1.26%, the Hang Seng Index by 2.6%, the Nikkei 225 Index by 1.5%, and the Singapore stock market by 2%.
Non-U.S. currencies gained strength across the board, with the New Zealand dollar rising by 1.46% against the U.S. dollar, the Australian dollar by 1.43%, the British pound by 0.83%, the euro by 0.54%, and the offshore renminbi by 0.15%. Both onshore and offshore RMB exchange rates rebounded significantly in the past week, experiencing over a thousand points increase and surpassing 1%. Moreover, the U.S. dollar hit an eight-year low against the Swiss franc, declining by 0.9%.
In the commodity market, Brent crude oil surged by 1.26%, surpassing $81 a barrel, achieving a high not seen since April. Spot silver rose by 2%, and LME copper rose by nearly 2%.
Financial institutions believe the likelihood of the Federal Reserve further raising interest rates is low. Guotai Junan predicts a slight rebound in U.S. inflation, both year-on-year and month-on-month, but expects minimal interest rate hikes beyond July. Similarly, Ping An Securities maintains that as core inflation breaks the sticky state, there will be a rate hike in July, possibly the last, and a reduced need for subsequent increases in September or November.
It is important to note that the opinions expressed in this article solely represent the author. Sohu operates as an information release platform, providing information storage space services. The article was released in Shanghai.