Dollar selling has been dominant this week. A series of remarks by the US financial authorities over the weekend made people aware of the terminal rate of interest rate hikes. The pace of rate hikes may slow down in the future, he said. The prevailing view in the market is that the interest rate hike will end at around 4.75% to 5.00%. Of course, depending on future inflation data, there is still a strong view that it will exceed 5%. However, the rise in US Treasury yields has come to a halt as there are signs that the mood is no longer all-or-nothing about large interest rate hikes.
Looking at trends in US 10-year bond yields, the upward trend has continued since August of this year. Among them, a short-term downward phase was seen from the second half of September to the beginning of October. At this time, there is a history of stopping at the 21-day moving average (around 3.54%). In the current downward phase, it is below the 10-day line (4.098%). The 21st line (3.945%) will be the target of a decline following the second half of September.
At the CME FedWatch, a consensus has been formed that the interest rate hike at the November FOMC will be 75bp. The focus will be on the next December meeting. 50bp and 75bp are almost evenly matched in the market. Of those, just under 4% are pricing in a 25 basis point hike.
Yesterday, the Conference Board Consumer Confidence Index (October) was weaker than expected, prompting dollar selling. It is pointed out that if economic data that the US economy slows down comes out in the future, there is a possibility that the movement of dollar selling will further intensify. Of course, depending on future inflation data, there is a possibility that expectations for a large interest rate hike will continue. Market views are divided, and it is becoming a mood to react sensitively to the results of economic data.
The economic indicators to be announced in overseas markets after this are the US MBA mortgage application index (10/15 – 10/21), US wholesale inventory (preliminary figures) (September), US new home sales (September). , Bank of Canada Policy Rate (October), Bank of Brazil Policy Rate (October), etc. The Bank of Canada is expected to raise interest rates by 75 basis points.
As expected, dollar selling trend. Tonight, the pair will continue to attack with a dollar-selling perspective.