Recently, euro dollars and pound dollars are being sold as if the weir had been cut. This is in contrast to the fact that the dollar-yen pair is in the 127-128 yen range and trading is mixed.
What is often said is the difference in the situation between the United States and Europe / UK. US monetary authorities have made a major shift to tightening monetary policy. FRB Chairman Jerome Powell himself has signaled the possibility of a significant rate hike at the May FOMC meeting, and is expected to take a strong step against inflation.
On the other hand, how about the ECB? Bank of China governors have pointed out the possibility of starting a rate hike in July in countries with high inflationary pressures. Historical inflation could hit as Russia’s energy embargo moves stronger. But what about ECB President Christine Lagarde? He has not shown a willingness to tighten monetary policy as much as Powell. The fear of stagflation may come to mind. The current state of the ECB is that there is a possibility that the number of captains will increase.
Also, how about the Bank of China? We are the first to start a rate hike route. However, wages have not yet risen to match inflation. The latest data puts a brake on retail indicators and consumer confidence. The harmful effects of high inflation are beginning to appear in consumer behavior. It seems that it is becoming a difficult stage to decide how far to push the rate hike. It is difficult to balance short-term inflation response with medium-term slowdown in growth.
Europe and the United Kingdom are in a situation where growth may be hindered, while the United States is showing a relatively favorable economic recovery. It seems that so-called fundamentals dollar buying, euro selling, and pound selling are easier to enter. Eurodollar is 1.06 and Pounddollar is 1.25, and the repulsive force in the Tokyo market is sluggish. The future trends in overseas markets will be watched.
Only USD is strong, and other currencies cannot keep up with it. As a trade, the development is to sell weak currencies in a timely manner based on buying USD.
- Stagflation is a phenomenon in which inflation (inflation, price increase) progresses at the same time as the economy slows down. This name is a compound word that combines “Stagnation” and “Iinflation”, which means economic stagnation.