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Market News Foreign exchange trading reminder on June 14: The Fed is expected to raise interest rates by 75 basis points, the US index is expected to hit a new 20-year high, and the Bank of England rate hike expectations may not save the pound
Foreign exchange trading reminder on June 14: The Fed is expected to raise interest rates by 75 basis points, the US index is expected to hit a new 20-year high, and the Bank of England rate hike expectations may not save the pound
The safe-haven dollar rose to a fresh 20-year high against a basket of currencies on Monday, buoyed by fears of a global economic slowdown and bets on a sharp rate hike by the Federal Reserve. The battered Japanese yen was one of the major currencies that rose against the dollar on Monday. Britain's economy unexpectedly shrank in April, with trade concerns in Northern Ireland weighing on sterling. GMT+8 At 02:00 on June 16, the Federal Reserve will announce its interest rate decision. Brad Bechtel, global head of foreign exchange at Jefferies Financial Group, said a 75 basis point rate hike would certainly be a surprise to some who are holding on to 50 basis points and would send the U.S. dollar index higher.
2022-06-14
8193
GMT+8 In early Asian trading on Tuesday (June 14), the US dollar index fluctuated at a high level and is currently trading around 105.14. The safe-haven dollar rose to a fresh 20-year high against a basket of currencies on Monday, buoyed by fears of a global economic slowdown and bets on a sharp rate hike by the Federal Reserve. The battered Japanese yen was one of the major currencies that rose against the dollar on Monday. Britain's economy unexpectedly shrank in April, with trade concerns in Northern Ireland weighing on sterling. Citi forecasts a modest rate hike by the Bank of England this week and continues to be bearish on the pound.
Global financial markets continued to be swayed by hotter-than-expected U.S. inflation data on Friday that led to a broad rise in risk aversion, fueling bets for more aggressive policy tightening. The U.S. dollar index rose 0.99 percent to 105.22 on Monday after climbing to 102.29, its highest since December 2002. The dollar extended Friday's gains as investors shed risky assets across the board, Brad Bechtel, global head of foreign exchange at Jefferies, said in a note.
GMT+8 At 02:00 on June 16, the Federal Reserve will announce its interest rate decision, policy statement and economic expectations, which will be the focus of the market. The Fed is widely expected to raise rates by 50 basis points this time around, and some institutions, including Barclays and Jefferies Financial, expect the Fed to raise rates by 75 basis points.
A 75 basis point rate hike would certainly be a surprise to some holding on to 50 basis points, Bechtel said, expecting such a move to send the U.S. dollar index higher.
The U.S. CPI rose 8.6 percent year-on-year on Friday, prompting money markets to expect the Federal Reserve to raise interest rates by 175 basis points through September. "As the Fed pushes real rates into restrictive territory, we expect the Fed to hike rates by at least 175 basis points this year, which is not good news for global growth," wrote ING economist Chris Turner.
The battered Japanese yen was one of the major currencies that rose against the dollar on Monday . The dollar rose to 135.19 on Monday, its highest since 1998, before closing up 0.01% at 134.41.
Japan's Chief Cabinet Secretary Hiroshi Matsuno said on Monday that the Japanese government is concerned about the recent sharp fall in the yen and is prepared to respond appropriately in the foreign exchange market if necessary. Capital Economics Japan economist Tom Learmouth said in a note that policymakers' increasingly assertive tone suggested they could soon escalate from verbal intervention. He added: “We don’t think FX intervention will have any effect other than a brief respite at potentially high costs.”
The Australian dollar, which reflects risk appetite, fell on Monday, with the Australian dollar closing down 1.72% at 0.6921.
Sterling fell to a one-month low of $1.2106 on Monday, facing selling pressure after data showed the U.K. economy unexpectedly shrank in April. Tensions between Britain and the European Union over post-Brexit trade issues with Northern Ireland also weighed on the pound. GBP/USD closed down 1.47% at 1.2108 on Monday.
1. ING: Dollar expected to remain strong after Fed rate decision
① The prospect of a sharp rate hike by the Federal Reserve, and market volatility prompting investors to turn to safe-haven assets, has proven to be an ideal combination for a stronger dollar. Given how quickly risk assets have fallen over the past few sessions, there could be some rebound in risk assets over the next few days and the dollar could soon face a pullback, but at the same time, we think Wednesday's FOMC rate statement will largely support the dollar;
② ING believes that the Fed may raise interest rates by 50 basis points on Wednesday and raise interest rate guidance
2. Mizuho Bank: The U.S. dollar has not lost its "king"
Mizuho Bank said that the U.S. inflation data in May reignited the risk aversion in the market and pushed the dollar up. Vishnu Varathan, head of economics and strategy at the bank, said the bank has long believed that the dollar's "kingdom" has not been shaken and is far from being replaced. The U.S. dollar is firmly in its dominance, and the intensity and speed of Fed rate hikes is expected to increase in the future. The focus in the first half of the week will be mainly on a stronger dollar weighing on the G10 and emerging Asian currencies. The next big event is the FOMC rate decision, and the market's hawkish expectations for the Fed are highly likely to come true
3. Societe Generale: The market is worried that the Fed has to speed up the tightening of monetary policy, which is good for the dollar
Societe Generale chief foreign exchange strategist Kit Juckes said that in general, the market is worried that energy prices are positive for the dollar, that the Fed may have to tighten monetary policy faster (good for the dollar), and that bond spreads in peripheral countries in Europe are widening.
4. MUFG: Financial conditions tighten again, continuing to support the dollar
Derek Halpenny, head of global markets, EMEA and international equity research at Mitsubishi UFJ Financial Group (MUFG), said: "Surge in short-term yields is driving a renewed tightening of financial conditions, which is likely to continue to provide support for the dollar this week. This week's Fed rate decision is the focus."
5. The decision of the Bank of England on June 19 strikes, and the institutions have different views on the impact of the pound
① The Bank of England will hold a meeting at GMT+8 at 19:00 on June 19. The market is expected to raise interest rates, and the rate of interest rate hikes may determine the performance of the pound on the day;
②Intesa Sanpaolo economist Asmara Jamaleh said: "There are signs that the rate hike path will be slightly wider, which will support the pound"
③ Citi analyst Ebrahim Rahbari said: "We expect the Bank of England to raise interest rates moderately and continue to be bearish on the pound"
Global financial markets continued to be swayed by hotter-than-expected U.S. inflation data on Friday that led to a broad rise in risk aversion, fueling bets for more aggressive policy tightening. The U.S. dollar index rose 0.99 percent to 105.22 on Monday after climbing to 102.29, its highest since December 2002. The dollar extended Friday's gains as investors shed risky assets across the board, Brad Bechtel, global head of foreign exchange at Jefferies, said in a note.
GMT+8 At 02:00 on June 16, the Federal Reserve will announce its interest rate decision, policy statement and economic expectations, which will be the focus of the market. The Fed is widely expected to raise rates by 50 basis points this time around, and some institutions, including Barclays and Jefferies Financial, expect the Fed to raise rates by 75 basis points.
A 75 basis point rate hike would certainly be a surprise to some holding on to 50 basis points, Bechtel said, expecting such a move to send the U.S. dollar index higher.
The U.S. CPI rose 8.6 percent year-on-year on Friday, prompting money markets to expect the Federal Reserve to raise interest rates by 175 basis points through September. "As the Fed pushes real rates into restrictive territory, we expect the Fed to hike rates by at least 175 basis points this year, which is not good news for global growth," wrote ING economist Chris Turner.
The battered Japanese yen was one of the major currencies that rose against the dollar on Monday . The dollar rose to 135.19 on Monday, its highest since 1998, before closing up 0.01% at 134.41.
Japan's Chief Cabinet Secretary Hiroshi Matsuno said on Monday that the Japanese government is concerned about the recent sharp fall in the yen and is prepared to respond appropriately in the foreign exchange market if necessary. Capital Economics Japan economist Tom Learmouth said in a note that policymakers' increasingly assertive tone suggested they could soon escalate from verbal intervention. He added: “We don’t think FX intervention will have any effect other than a brief respite at potentially high costs.”
The Australian dollar, which reflects risk appetite, fell on Monday, with the Australian dollar closing down 1.72% at 0.6921.
Sterling fell to a one-month low of $1.2106 on Monday, facing selling pressure after data showed the U.K. economy unexpectedly shrank in April. Tensions between Britain and the European Union over post-Brexit trade issues with Northern Ireland also weighed on the pound. GBP/USD closed down 1.47% at 1.2108 on Monday.
Tuesday's key data preview
Aggregate Viewpoints
1. ING: Dollar expected to remain strong after Fed rate decision
① The prospect of a sharp rate hike by the Federal Reserve, and market volatility prompting investors to turn to safe-haven assets, has proven to be an ideal combination for a stronger dollar. Given how quickly risk assets have fallen over the past few sessions, there could be some rebound in risk assets over the next few days and the dollar could soon face a pullback, but at the same time, we think Wednesday's FOMC rate statement will largely support the dollar;
② ING believes that the Fed may raise interest rates by 50 basis points on Wednesday and raise interest rate guidance
2. Mizuho Bank: The U.S. dollar has not lost its "king"
Mizuho Bank said that the U.S. inflation data in May reignited the risk aversion in the market and pushed the dollar up. Vishnu Varathan, head of economics and strategy at the bank, said the bank has long believed that the dollar's "kingdom" has not been shaken and is far from being replaced. The U.S. dollar is firmly in its dominance, and the intensity and speed of Fed rate hikes is expected to increase in the future. The focus in the first half of the week will be mainly on a stronger dollar weighing on the G10 and emerging Asian currencies. The next big event is the FOMC rate decision, and the market's hawkish expectations for the Fed are highly likely to come true
3. Societe Generale: The market is worried that the Fed has to speed up the tightening of monetary policy, which is good for the dollar
Societe Generale chief foreign exchange strategist Kit Juckes said that in general, the market is worried that energy prices are positive for the dollar, that the Fed may have to tighten monetary policy faster (good for the dollar), and that bond spreads in peripheral countries in Europe are widening.
4. MUFG: Financial conditions tighten again, continuing to support the dollar
Derek Halpenny, head of global markets, EMEA and international equity research at Mitsubishi UFJ Financial Group (MUFG), said: "Surge in short-term yields is driving a renewed tightening of financial conditions, which is likely to continue to provide support for the dollar this week. This week's Fed rate decision is the focus."
5. The decision of the Bank of England on June 19 strikes, and the institutions have different views on the impact of the pound
① The Bank of England will hold a meeting at GMT+8 at 19:00 on June 19. The market is expected to raise interest rates, and the rate of interest rate hikes may determine the performance of the pound on the day;
②Intesa Sanpaolo economist Asmara Jamaleh said: "There are signs that the rate hike path will be slightly wider, which will support the pound"
③ Citi analyst Ebrahim Rahbari said: "We expect the Bank of England to raise interest rates moderately and continue to be bearish on the pound"
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