The US dollar has hit a new low for more than a week in three consecutive negative sessions, and the European Central Bank may be preparing to raise interest rates more significantly

5month18At the beginning of the Japanese Asian market, the US dollar index hovered around103.3Nearby, the US dollar fell for the third consecutive day on Tuesday, continuing to decline against a basket of major currencies20The decline in annual highs has weakened the attractiveness of the US dollar as investors' risk appetite has increased. Track the decline of the US dollar index against six major currencies0.9%, to5month6The lowest level since the beginning of the day103.22。
Wednesday(5month18day)At the beginning of the Asian market, the US dollar index hovered around103.3Nearby, the US dollar fell for the third consecutive day on Tuesday, continuing to decline against a basket of major currencies20The decline in annual highs has weakened the attractiveness of the US dollar as investors' risk appetite has increased. Track the decline of the US dollar index against six major currencies0.9%, to5month6The lowest level since the beginning of the day103.22。

Furui Financial Group(Jefferies)foreign exchangeGlobal Head of BusinessBrad BechtelIn a report to clients, it said, "Compared with last week, market sentiment has improved significantly. Most asset classes rebounded and reversed the trend of last week. As a result, the stock market rose, fixed income assets were sold off, and almost all currencies in the world rose against the US dollar."

Data display, United States4The strong growth in monthly retail sales, coupled with improved supply and increased restaurant expenses, led to a rise in motor vehicle sales, which brought a significant boost to the economy at the beginning of the second quarter, but the US dollar remained sluggish thereafter.

Federal Reserve Chairman Powell stated in an event in the Wall Street Journal on Tuesday that the Federal Reserve will "continue to push" to tighten monetary policy until inflation significantly decreases and the US dollar index shrinks.

The euro rose more than1%Continuing the rebound momentum after hitting a five-year low last week, the distance between the euro and its parity with the US dollar has further widened. The euro strengthened after the Dutch central bank president and European Central Bank management committee member Knott made hawkish remarks; Knott stated that the European Central Bank will not only7Monthly interest rate increase25A basis point, and we are also prepared to consider a larger interest rate hike if inflation is higher than expected.

Chief Foreign Exchange Strategist, ScotiabankShaun Osborneexpress:We believe that the decline of the euro is beginning to appear excessive

The pound also took advantage of the weakening US dollar to jump up1.4%, reaching5month5The highest level in recent days, with strong UK labor market data strengthening expectations that the Bank of England will continue to raise interest rates to combat inflation.

AUD/USD up, seen as a liquidity indicator of risk appetite0.8%According to the meeting minutes released on Tuesday, the Federal Reserve of Australia5At the monthly meeting, a larger interest rate hike was considered, which strongly suggests that it will be6Interest rates will rise again on a monthly basis.

Germany hosts the meeting at an uncertain time within the dayG7Meeting of Finance Ministers and Central Bank Governors.

Institutional perspective

Wall Street warns that the liquidity of the stock market and bond market is becoming weaker2020Year is as bad as year

Although the US stock market has rebounded, looking at the various characteristics that represent the low liquidity bear market trap, you can understand Wall Street's skepticism. In recent months, the trading situation of stocks and bonds has become increasingly bad, as fund managers find it difficult to buy and sell large orders without affecting prices2020The situation during the collapse of the epidemic in.

JPMorgan Chase believes that even by the standards of the collapse of the pandemic more than two years ago, S&P500indexfuturesThe liquidity (i.e. the difficulty of trading) is also very worrying. In the data of Goldman Sachs Group, the market depth of US treasury bond bonds is approaching the historic and terrible level. JPMorgan Chase StrategistNikolaos PanigirtzoglouIn the email, it was written that the market depth is not as deep as2020year3How much better is the month, which means that the market's ability to digest relatively large trading orders without significantly affecting prices is currently very low.

although2020The trading difficulties of the year began to ease in just a few weeks, but times have changed. As the Federal Reserve gradually withdraws from the era of loose money against the backdrop of strong economic data, for many Wall Street people, this problem seems endless this year. And this has also become a source of cross asset volatility. Goldman Sachs interest rate strategistAvisha ThakkarThe market depth and price impact indicators are approaching the levels of the pandemic shock period, indicating a considerable risk of price disorder fluctuations. Without the Federal Reserve as a backup buyer, a side effect is that when the shock does occur, the risk of market fragility is greater.

analystCameron CriseIf inflation does not subside during the summer, the Federal Reserve may be forced to9Significant interest rate hikes in the month or after

If inflation does not subside during the summer, the Federal Reserve may be forced to9Raise interest rates significantly in the month or after. This is not reflected in market pricing, therefore9Of the monthFOMCThe meeting needs to focus on the Federal Reserve's response and market risks. Of course, Powell sounds very tough, which is not surprising at all. He pointed out that if needed,FOMCWill not hesitate to exceed the neutral interest rate. Of course, no one really knows where the neutral interest rate is in the short term, although the committee believes that in the long run, the nominal neutral interest rate is2.375%-2.5%about.

Analyst: If Brad's prediction of yield is accurate So the stock market rebound will be difficult to sustain

On Tuesday, the stock market rebounded again, but if St. Louis Fed Chairman Brad's words are true, the rebound will be difficult to sustain. Brad predicts that as the central bank shrinks its balance sheet size, yields will face upward pressure. Decision makers need to pay attention to the impact of 'global quantitative tightening', as other central banks are also shrinking their balance sheets. The prospect of the Federal Reserve tightening policy has already been reflected in the market;

This means that the balance sheet, rather than the interest rate outlook, will be the main driving force in the market.10The yield of one-year US treasury bond bonds may rise above3%The US dollar may resume its upward trend. The stock market rebound we see may just be a pause in widespread selling in the market.

analystDivyang Shah: European Central Bank9Monthly interest rate increase50The likelihood of a basis point is greater

Today's speech by the hawkish European Central Bank regulator, Not7Raising interest rates at monthly meetings50A basis point becomes possible, and current bets indicate that the European Central Bank will raise interest rates50The probability of a basis point is15%。 We believe that the European Central Bank is more likely to raise interest rates25Starting from a basis point and will be9Consider a more significant interest rate hike at the monthly meeting50If this really happens, then12Monthly interest rate increase50The possibility of a basis point should not be ruled out.