Foreign exchange trading reminder on October 15: The U.S. dollar fell in shock trading, commodity currencies led the rise

On Thursday (October 14), the U.S. dollar index fell 0.06 to 93.98, rebounding from an earlier 10-day low of 93.75. On Tuesday, the U.S. dollar hit a one-year high of 94.563. The latest data show that the number of initial jobless claims last week dropped sharply to the lowest level since mid-March 2020. Another report released by the US Department of Labor shows that the producer price index (PPI) of final demand has risen.

Vassili Serebriakov, foreign exchange and macro strategist at UBS, said that the rebound in risk willingness may also weaken the demand for safe-haven in the US dollar. The US stock market rose strongly due to optimistic corporate earnings reports.

The U.S. dollar has risen sharply since the beginning of September, as the market expects that the Fed will tighten monetary policy at a faster rate than previously expected as the economy improves and inflation soars. But the U.S. dollar reversed its trend on Wednesday. Earlier, the Fed’s September 21-22 policy meeting minutes confirmed that it may start reducing stimulus measures this year, and data shows that price pressures are still hitting American consumers.

Shaun Osborne, chief foreign exchange strategist at Scotia Capital, said that I think there has been some profit-taking in the U.S. dollar in the past one or two days; I don’t think it is close to a major reversal of the U.S. dollar. In fact, I think what we are seeing today is possible. It is a signal that the callback rebound we have seen in the past one or two days may be over. Osborne added that the market expects that the Fed will begin to reduce the scale of asset purchases as early as next month, and the large-scale bond purchase program will be reduced quite quickly. This seems to be moving to a certain extent towards when and how quickly the Fed will raise interest rates. So this may be another positive factor for the US dollar.

Monex's Simon Harvey said that as far as the U.S. dollar is concerned, we expect a mild retracement after a very aggressive trend. We expect that the US long-term interest rate will have limited upside. This trend will be seen after the U.S. announced the minutes of the CPI and FOMC meetings this week. Almost done, this helps currencies that are sensitive to US Treasury yields, such as the yen and the euro.

The euro to dollar was basically flat at 1.1593, falling from a nine-day high hit overnight; the pound rose 0.6% to 1.3734 against the dollar.

The U.S. dollar to yen rose 0.38% to 113.68; John Hardy of Saxo Bank pointed out in a report that the negative trend of the yen has become more and more intense-a bit contrary to the decline in US long-term yields, but strong commodities The rise is also not good for the yen.

The Swiss franc hits the strongest against the yen since December 2015 and the highest against the euro since November 2020; the Swiss franc is currently regarded as the most popular tool to avoid the risk of economic stagflation. HSBC Dominic Bunning wrote that in view of the slowdown of the global economic growth cycle and the counter-cyclical nature of the Swiss franc, our strategic view is that the euro against the Swiss franc will further gradually decline.

The U.S. dollar fell 0.71% against the Canadian dollar, hitting a new low since July 6 to 1.2355; the Australian dollar rose 0.50% against the U.S. dollar to $0.7416, the highest level since September 7; the New Zealand dollar rose 1.03% against the U.S. dollar to $0.7036. , The highest in the past three weeks.

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Summary of Institutional Views

ABN AMRO: Even if the Fed's tightening policy was a mistake, the US dollar will also be boosted

Even if the Federal Reserve is wrong to tighten monetary policy, the U.S. dollar will strengthen. ABN AMRO analysts said that US long-term Treasury bond yields fell on Wednesday, suggesting that tightening policies will "may be a policy error," although the fact that stock markets and commodities are rising indicates that the fall in yields may have little effect. Although the U.S. dollar has weakened in the past few trading days, our view is that even if the Fed’s tightening policy is premature or too aggressive, the action is still beneficial to the U.S. dollar.

Westpac: rising inflation may cause the euro to break through 1.15 against the dollar

Westpac said that rising inflation data may cause the euro to break through 1.15 against the dollar. The core members of the European Central Bank recently emphasized that they want to avoid premature withdrawal from the easing policy and emphasized that the current upward inflationary pressures are mostly temporary. By emphasizing this, they Effectively postponed any possibility of early "recalibration" of the Emergency Anti-epidemic Bond Purchase Plan (PEPP) (which will end at the end of the first quarter) and the Asset Purchase Plan (APP), at least until the staff update the forecast in December; the most recent The survey data has significantly weakened, while the inflation data is still at a high level, highlighting that supply costs and labor constraints are hindering economic activity, and attention should be paid to the October PMI. The European Central Bank’s cautious stance puts it at the end of the global shift to austerity or interest rate hikes. , May limit any rebound of the euro against the dollar, and continue to put pressure on the 1.1500 support level.

TD Securities: The Bank of Canada is expected to raise interest rates in July 2022

Andrew Kelvin, chief Canadian strategist at TD Securities, predicts that the Bank of Canada may raise interest rates in July 2022, a quarter earlier than expected. Kelvin said that we now expect the output gap to be closed in the third quarter of 2022. Therefore, we advance the expected time of the first interest rate hike by the central bank by one quarter to July 2022. TD Securities also predicts that the Bank of Canada will raise interest rates by 25 basis points in October 2022 and January 2023.