The Federal Reserve is hawkish, and the dollar index will remain strong

【 Weekly review and prospect of foreign exchange market 】2022Section39week

Last week, after the Federal Reserve announced its interest rate resolution and Federal Reserve Chairman Powell's hawkish speech at a press conference, the US dollar index broke through the recent110The upper edge of the box rises to113Above all, this trend is completely consistent with the prediction of Huizhijun in the previous issue of the "Foreign Exchange Weekly Review and Prospects". With the rise of the US dollar index, the exchange rates of major non US currencies such as the yen, euro, pound, and renminbi, as well as gold prices, have significantly declined.

Specifically:

Let's take a look at the US dollar index first. During the Asian trading session on Monday, Tuesday, and Wednesday last week, the US dollar index was110A small range centered fluctuation. Tuesday and Wednesday are the current year's Federal ReserveFOMCSection6Meeting, as it approaches early Thursday Beijing time2After the announcement of the interest rate resolution on Wednesday, the US dollar index began to significantly rise and gradually moved towards the European trading session111Approaching, breaking through in one fell swoop as the Federal Reserve announced its interest rate results even closer111Integer level, interest rate increase0.75After the announcement of a percentage point interest rate resolution, the US dollar index briefly fell significantly and returned to111However, since then, Federal Reserve Chairman Powell's statement at a press conference that despite economic recession and rising unemployment, he will continue to raise interest rates to suppress inflation has once again stimulated the rise of the US dollar index and returned to111On that day, the US dollar index rose by1.07%。 On Thursday, the US dollar index revolved around111We have conducted vibration consolidation. On Friday, the US dollar index surged again, repeatedly exceeding112and113Two integer levels, highest to113.2390, closing on113.0324, skyrocketing on the same day1.57%, thereby driving the whole week's rise3.08%It has become the fastest growing week this year and should also be among the highest weekly gains in history. To summarize, the significant rise in the US dollar index is mainly due to the Federal Reserve's aggressive policy of raising interest rates and shrinking the balance sheet. Of course, the economic fundamentals are also strong, significantly better than those of Europe and Japan.

Created with the US dollar index20In recent years, the exchange rates of the euro, yen, and pound against the US dollar have all reached a new levelnThe new low since the beginning of the year.

Last Thursday, the lowest exchange rate of the Japanese yen fell to145.91Japanese yen/USD——1998year9The new low since the beginning of the month was immediately followed by reports of Japanese government intervention in the market, and the Japanese yen exchange rate broke through one after another145、144、143、142、141etc.5Integer digits, up to140.3500Japanese yen/The US dollar, with the yen exchange rate already severely undervalued, is bound to experience such a significant rebound in government intervention in the market. However, on Friday, the yen weakened again and returned143Above Japanese yen, closing at143.3530Japanese yen/USD, with a weekly decline of0.29%

Last week, the exchange rate trend of the euro and pound against the US dollar was exactly opposite to that of the US dollar index. On Friday, the euro exchange rate dropped to its lowest point0.9668dollar/Euro——2002year10The lowest since the month, closing at0.9687dollar/Euro, weekly decline of3.28%。 On the same day, the lowest exchange rate of the pound fell to1.0838dollar/GBP——1985year4The lowest since the month, compared to1985year3The record low monthly exchange rate between the pound and the US dollar1.0520dollar/The difference in pounds is only318Basis points, only slightly higher in magnitude3%The weekly decline is as high as5.05%。The pound exchange rate fell sharply. On the one hand, the dollar exchange rate rose sharply, and the pound was under passive pressure. On the other hand, the new British government in Tras was preparing to launch a large-scale tax reduction plan, thus dragging down the pound exchange rate.

Last Friday, the spot exchange rate of the onshore RMB both fell below7.10element/USD, for2020year6The new low since the beginning of the month, the spot exchange rate of the onshore Chinese yuan decreased by1.61%, second only to4month22The second largest weekly decline in the current week, however, compared to the euro and pound, the decline is still relatively small.

Last week, gold prices also fell out of a new low for the year, with spot gold prices in London hitting their lowest point on Friday1638.90dollar/A new low of ounces for the year, closing at1643.60USD, with a weekly decline of1.82%。 Compared with the changes in the US dollar index and major non US currency exchange rates last week, the decline in gold prices is relatively small. According to the general pattern in the past, the US dollar index has surged3.08%In this case, the decline in gold price should exceed this range, why only1.82%What about it? This should be seen from the overall performance of global financial markets. Last week, with the significant rise of the US dollar index, global stock markets generally fell, especially in developed countries where stock markets generally plummeted, and global financial risks significantly increased. In this case, as a hedge with certain functionsgoldIt will show a certain degree of resistance to decline.

Outlook for this week:

With the passing of last week's Global Super Central Bank Week, there will be a period of relative calm in the future.

Next week, there will be relatively few heavyweight data from countries such as Europe, America, and Japan. You can refer to relevant websites orappWe will not elaborate on it here.

In the short term, there is a demand for technical adjustments in the US dollar index. In the future, it is not ruled out that the US dollar index will decline, and exchange rates such as the yen, euro, and pound, which have hit new lows this year, will experience a technical rebound. However, it should still be pointed out that,Whether from the perspective of economic fundamentals or monetary policy, the US dollar index will remain strong, and there is currently no possibility of a turning point。

As for the RMB exchange rate, it is currently in a weak position and has fallen below7.10As long as the US dollar index does not fall significantly, the RMB exchange rate is expected to remain weak. Currently, it is not ruled out that it will decline towards7.20The possibility of.