The direction of the dollar exchange rate is uncertain this week. Following the strong results of last weekend’s US employment statistics and this week’s ISM non-manufacturing business sentiment index, there is widespread speculation that the US Fed’s interest rate hike end point (terminal rate) will rise and that the rate hike will be delayed. This seems to be the reason for the recent rise in the dollar exchange rate.
On the other hand, due to the series of slowdowns in the US price index, the December FOMC meeting is expected to limit the rate hike to 50bp for the first time in five meetings. There is also a market consensus on the reduction of future interest rate hikes, and there is a history of forming the trend of the dollar’s depreciation since November.
In addition, expectations for the reopening of the Chinese economy are also drawing attention. It is still fresh in our minds that demonstrations against the strict corona regulations intensified in China. The zero-coronavirus policy is hurting China’s growth potential, and the central government may have wanted an opportunity to relax the strict measures. In order to understand the dissatisfaction of citizens, moves to relax restrictions on the corona virus have been announced one after another. A series of measures were announced today as well, and if risk sentiment turns around, this is likely to put pressure on the dollar to sell.
When observing the dollar index. We can see that the dollar has continued to depreciate since November. Although it is accompanied by vertical movement, the movement in one direction lasts only about three days. If the stock market picks up, it will be pointed out that there is a possibility that the dollar will return to a trend of depreciation.
The US dollar has no sense of direction, but more than that, the yen is depreciating and USDJPY is rising significantly. The aim is to continue to sell the US dollar.