The dollar market continues to trend toward a weaker dollar. As for the future direction of the US Fed, the 50bp rate hike at the December meeting has become almost a consensus, and expectations for a slowdown in the pace of rate hikes next year are becoming mainstream. On the other hand, it is necessary to continue raising interest rates to achieve the goal of keeping inflation under control. Market expectations of terminal rate levels are still hovering around 5%. In other words, although the range of rate hikes at each meeting will be reduced from 75 basis points in the future, there is still no consensus on how long and how much it will continue to be raised. However, extreme views seem to be waning. The depreciation of the dollar is also expected to gradually slow down.
UK Chancellor of the Exchequer Hunt will announce the medium-term financial plan today. It is envisioned that it will be a fiscal austerity measure that includes tax increases in advance. It seems that they are aware that the drastic tax cuts without financial resources under the former Truss administration have damaged the credibility of the UK too much. However, given that a recession is inevitable due to high inflation, how about a measure to boost the economy? The reaction of the market is unclear, but I would like to check the movements of British bonds, British stocks, and pound exchange rates.
The US dollar has calmed down and is currently rebounding. However, we assume that the upside will be limited.
