The dollar exchange rate fluctuated at the beginning of the week. The surge in crude oil prices is the reason for the dollar buying. Unexpected announcements of large production cuts by Saudi Arabia and others have led to a surge in crude oil futures. Inflationary fears are associated with tightening US interest rates. In the short-term money market, the main axis of the May FOMC observation has moved from the unchanged group to the 25bp rate hike group.
On the other hand, the selling of the dollar was due to the weakening of the US ISM Manufacturing Index released in the New York market. The dollar is selling off as US Treasury yields fall.
At present, crude oil prices remain high. In addition, the 25bp interest rate hike continues to outpace the moratorium on the May US FOMC forecast in the short-term money market. However, the dollar exchange rate has not broken the weak dollar trend since March.
The future checkpoint is the sustainability of high oil prices. If it continues for longer than expected, there is a risk that it will spread as a new source of inflation. In the current market, as headline inflation peaks out, the economy is gradually decelerating due to the cumulative effect of interest rate hikes so far, and the spillover effects of inflation are gradually easing, leading to the beginning of interest rate cuts. It remains to be seen whether this scenario will be affected by higher oil prices.
USD continues to sell.
Currently, the power balance on the 15 minute foot is
GBP > EUR = NZD > CHF > CAD > AUD = USD > JPY