A notable event this week is the Jackson Hole conference later in the week. In particular, Fed Chairman Jerome Powell’s speech on the 26th is seen as an important factor in judging future US monetary policy trends. With the US mid-term elections approaching, the Biden administration’s top priority is to deal with inflation. The US Fed is also likely to be forced to deal with inflation in the near future.
However, as the latest inflation indicators have finally stabilized, the market’s expectations for a September FOMC interest rate hike are prevalent at 50 basis points. At the line of 50bp 60% and 75bp 40%, the market has stabilized recently.
Last week, the trend of dollar appreciation reignited, with the dollar/yen pair rising above the 137 yen level and the euro/dollar pair approaching parity (1 euro = 1 dollar) again. Strong dollar pressure remains intact at the beginning of the week. As mentioned above, the US side’s strong dollar seems to have calmed down a little, and it is likely that the recent strong dollar pressure is being supported from the side by anxiety about the economic recession in Europe and China. There are many headaches, such as energy problems in Europe and real estate problems in China. China lowered its LPR today.
The Hong Kong Consumer Price Index (July) will be announced today, and other major countries are not scheduled to release major economic indicators. Financial officials’ remarks event schedule is also not seen. Amid the shortage of raw materials, there is a possibility that last week’s trend of dollar appreciation will be adjusted, but dollar-buying pressure seems to be waiting. I would like to check the strength of the dollar’s strength.
Basically, it is a USD buy perspective, but be careful as it is easy to buy EUR and sell USD near the EURUSD parity (1.0000).