ATFXForeign exchange market: The Federal Reserve's interest rate decision is coming, with a high probability of remaining unchanged. Focus on Bao...

Thursday3:00The Federal Reserve will announce the results of its first interest rate decision for the beginning of the year, and the market expects it to remain unchanged5.5%The upper limit of the federal funds rate remains unchanged. Half an hour later, Federal Reserve Chairman Powell will hold a monetary policy press conference, focusing on his remarks on the economic situation, inflation rate, and unemployment rate. If his stance is biased, the expectation of interest rate cuts will be boosted, which will be bearish for the US dollar index. Yesterday, the President of the European Central Bank, Lagarde, stated that "every member of the management committee agrees that the next step is to cut interest rates," boosting market expectations for the ECB's interest rate cut. Due to the strong resonance between the monetary policies of the European Central Bank and the Federal Reserve, it is expected that Powell will also make remarks similar to Lagarde's expectation of boosting interest rate cuts.

From an economic data perspective, the United States released last Friday12Monthly CorePCEAnnual rate of price index2.9%, lower than the previous value3.2%, lower than expected3%This means that the inflation rate is further decreasing, and the basis for the Federal Reserve to maintain high interest rates is disappearing.12Monthly CoreCPIAnnual rate from4%Descend to3.9%, creating2021year6The new low since the beginning of the month indicates that high inflation is no longer a major threat to the US macroeconomy. This Friday, the US Department of Labor will update this year1The unemployment rate and non farm employment data for the month are expected to increase in the former and decrease in the latter, indicating a contraction in demand in the labor market. On the one hand, high inflation is cooling down, and on the other hand, the labor market is showing a slight decline, increasing the probability of a hard landing for the US macroeconomy and increasing the urgency for the Federal Reserve to cut interest rates.

In the bond market, the yield of two month treasury bond bonds of the United States5.49%, three-month treasury bond bond yield5.37%The yield of long-term treasury bond bonds is lower than that of short-term ones, which means that the Federal Reserve is highly likely to cut interest rates between two and three months. After the three-month period, the yield of each short-term treasury bond is higher than that of long-term treasury bond, indicating that interest rates will be cut more than once this year.10The yield curve of one-year treasury bond bonds has been1month24The shift from rising to falling means that the bond market's expectation of the Federal Reserve's interest rate cut is once again strengthened.


From a technical perspective, the US dollar index is in the rebound stage of a medium to long-term downward trend, and the overall rebound band shows horizontal fluctuation characteristics.1month24At the beginning of the day, US bond yields have turned downward, but the US dollar index is still trading sideways without a significant decline. Traditional logic holds that bond yields are the fundamental driving force behind changes in the US dollar index, and there is a high probability of a downward trend in the future development of the US dollar index under pressure. Awesome Oscillator KDThe reading is at a relatively high level, with fast and slow lines intertwined and may continue to fluctuate in the short term.MACDThe bar line of the indicator is above the zero axis, but the absolute value is low, indicating insufficient bullish momentum. On the whole, most indicators believe that the dollar index will continue to fluctuate laterally in the short term and may fall back with the yield of treasury bond bonds in the medium term.

Risk reminder, disclaimer, special statement:
There are risks in the market, and investment needs to be cautious. The above content only represents the analyst's personal views and does not constitute any operational suggestions. Please do not consider this report as the sole reference. At different times, analysts' perspectives may change, and updates will not be notified separately.

2024-01-31