Dollar Strength Continues, Trump Trade Accelerates with Triple Red Effect
The U.S. dollar continues to surge, with the dollar index reaching a new high for the year. Yesterday, the Republican Party secured a majority in the U.S. House of Representatives, completing the “Triple Red” scenario where all three branches of government are controlled by the Republican Party (red). This makes it easier for the Trump administration to implement its policies, further strengthening the Trump trade.
USD/JPY Hits New Highs, Intervention Concerns Mount
USD/JPY rose to 156.14, marking its highest level since July 23. While there is growing concern about possible intervention once the yen crosses the 155 yen level, some argue that intervention may have limited effect as the overall strength of the dollar remains intact. On the other hand, the 160 yen level is again seen as a potential intervention line, keeping market focus on future developments.
Key Events Today: U.S. Producer Price Index (PPI) and Initial Jobless Claims
Today, the U.S. will release the October Producer Price Index (PPI) and initial jobless claims. The U.S. Consumer Price Index (CPI) yesterday met expectations, with a brief dip in the dollar following the release, before returning to its strong upward trend. PPI is expected to rise by 2.3% year-on-year and 3.0% for core PPI, accelerating from the previous figures, which could further support the dollar. Initial jobless claims are expected to remain steady at around 220,000.
Focus on Powell’s Speech, Market Awaits Response to Inflation and Dollar Strength
The biggest event today is the speech by Fed Chair Jerome Powell. At the Dallas-Fort Worth World Affairs Council, he will address the U.S. economic outlook, including the effects of Trump’s policies on inflation and monetary policy. The market is wary of rising inflation and further dollar strength, and Powell’s response will be crucial.
European and Other Economic Data and Events
In Europe, key economic indicators will be released:
- Eurozone: Industrial Production Index (September), Revised GDP (Q3)
- The Industrial Production Index is expected to turn negative, while the GDP revision is anticipated to be in line with the preliminary figures.
Additionally, speeches are scheduled by ECB Vice President De Guindos, FRB Governor Couglar, Bank of England Committee Member Mann, and ECB Board Member Schnabel. The ECB meeting minutes from October 16-17 will also be released. U.S. weekly oil inventory data and earnings reports from companies like Disney, Applied Materials, and Macy’s are also expected to impact the market.
Key Focus Today: U.S. Producer Price Index (PPI)
The key focus tonight is the U.S. Producer Price Index (PPI), which can lead to significant movements in the U.S. dollar. Traders should pay close attention to this release.
Future Trading Strategy: Maintain USD and Cryptocurrency Buy Positions
As part of the ongoing strategy, I will continue to maintain USD buying positions and buy positions in cryptocurrencies, staying responsive to market movements.
