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Market News Foreign exchange trading reminder on November 11: Inflation data hit a 31-year high, and the US dollar soared to a 16-month high
Foreign exchange trading reminder on November 11: Inflation data hit a 31-year high, and the US dollar soared to a 16-month high
On November 10, the U.S. dollar index surged 1%, refreshing its highest point since July last year to 94.90. As US consumer prices hit the largest increase since 1990, this triggered speculation that the Fed might raise interest rates earlier, stimulating U.S. bond yields to jump across the board. . All G-10 currencies fell against the US dollar, and the euro hit a new low of 1.1476 during the year, affected by patterns and cross-selling pressure; Norwegian kroner and Swedish krona led the decline, and options volatility indicators for various currencies rose
2021-11-11
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On Wednesday (November 10), the US dollar index was 0.96% in late trading to 94.88, after hitting a high of 94.90 in more than 15 months. Although the Fed reiterated last week that its current inflation spike will be short-lived, many investors said it was more than expected. Longer than expected may force the Fed to raise interest rates.
According to the US Department of Labor, the Consumer Price Index (CPI) rose by 0.9% in October after rising 0.4% from the previous month in September, representing a year-on-year increase of 6.2%.
Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, said that "quite alarming" inflation figures, including sharp house price increases, suggest that high consumer prices "are unlikely to prove to be temporary."
Independent foreign exchange analyst Erik Bregar said that a data reflecting rising inflation made investors speculate that the Fed might raise interest rates early. Supported by the weakening of the gold price and the expiration of the euro against the dollar option, the dollar expanded its gains during the session.
After 13:00 U.S. Eastern time, the U.S. dollar received a further boost. The weak results of the previous 30-year U.S. Treasury tenders pushed up U.S. Treasury yields.
Although the Fed is already reducing its bond purchases, Nancy Davis, founder of Quadratic Capital Management, said that raising interest rates may not be enough to reverse inflation because the Fed cannot control supply chain bottlenecks and fiscal expenditures. If inflation does not recede, the Fed may need to reduce debt purchases and raise interest rates even more, which may hurt the stock and bond markets.
The euro fell 0.98% against the US dollar to 1.1479 US dollars, and earlier touched 1.1476 US dollars, the lowest since July 21, 2020; the German Council of Economic Advisers urged the European Central Bank to formulate strategies to normalize monetary policy.
At the same time, the pound fell to its lowest level against the U.S. dollar since December 23, as the United Kingdom and the European Union seem to be far from reaching an agreement on resolving the issue of Northern Ireland after Brexit, adding to the pressure on U.S. inflation data. .
The pound fell 1.12% against the U.S. dollar in late trading to $1.3405 after the pound fell below Friday's low of $1.3425. The pound was hit hard by the unexpected decision by the Bank of England to keep interest rates unchanged.
As traders pursued the U.S. dollar, the yen also plummeted, thus ending the four-game streak. The U.S. dollar rose 0.92% to 113.91 against the yen. Stop-loss orders were triggered above 113.5 and 113.7; before the 114 psychological barrier, The gains were slow, and the $1.4 billion option expired on Friday.
The US dollar against the Canadian dollar rose above the 200-day moving average to 1.2499, but a large number of options expiring near 1.2500 this week slowed the rise; the weakness of the Canadian dollar was affected by the more than 3% drop in crude oil prices, and the drop in oil prices returned to other commodity-linked currency belts Coming under pressure.
The Australian dollar fell 0.69% against the US dollar to 0.7327, and earlier hit 0.7324, the lowest since October 13; the New Zealand dollar fell 0.95% against the US dollar to 0.7061;
OPEC publishes its monthly crude oil market report (the specific publication time of the monthly report is to be determined, generally around GMT+8 18-21)
17:00 European Central Bank publishes economic bulletin
With bets that the Bank of Japan will lag behind other central banks (especially the Federal Reserve) in tightening policies, shorting the yen has become a popular transaction in the foreign exchange market. According to data from the Commodity Futures Trading Commission, the level of bearishness in leveraged fund yen positions is the strongest since January 2019. Since 2021, the yen has fallen by 8.5%. Such transactions have been under pressure this month, with the yen rising about 1% in November, the largest gain among G10 currencies. John Hardy, head of foreign exchange strategy at Saxo Bank, said that at a time when the return on long-term safe-haven assets globally has fallen sharply, the yen is rising and challenging speculative positions. For the yen to properly reverse its decline from the September level, the U.S. and Japan will need to fall below 112 or even reach 111.25.
After a few trading days of seesaw, the pound began to find a little support. But this is hard to attribute to the fact that the Bank of England is tightening the market’s interest rate hike expectations. After the Bank of England announced its interest rate decision last Thursday, the proportion of short sterling contracts in December 2022 is still 25 higher than before the announcement. Points. It is expected that the British pound against the U.S. dollar GBP/USD will fluctuate in a wide range of 1.34-1.38 before the end of the year. Speculators do not have enough confidence to push the pound below the September support level. After the release of the UK's third-quarter GDP data on Thursday, pound trading is expected to be even more sluggish.
According to the US Department of Labor, the Consumer Price Index (CPI) rose by 0.9% in October after rising 0.4% from the previous month in September, representing a year-on-year increase of 6.2%.
Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, said that "quite alarming" inflation figures, including sharp house price increases, suggest that high consumer prices "are unlikely to prove to be temporary."
Independent foreign exchange analyst Erik Bregar said that a data reflecting rising inflation made investors speculate that the Fed might raise interest rates early. Supported by the weakening of the gold price and the expiration of the euro against the dollar option, the dollar expanded its gains during the session.
After 13:00 U.S. Eastern time, the U.S. dollar received a further boost. The weak results of the previous 30-year U.S. Treasury tenders pushed up U.S. Treasury yields.
Although the Fed is already reducing its bond purchases, Nancy Davis, founder of Quadratic Capital Management, said that raising interest rates may not be enough to reverse inflation because the Fed cannot control supply chain bottlenecks and fiscal expenditures. If inflation does not recede, the Fed may need to reduce debt purchases and raise interest rates even more, which may hurt the stock and bond markets.
The euro fell 0.98% against the US dollar to 1.1479 US dollars, and earlier touched 1.1476 US dollars, the lowest since July 21, 2020; the German Council of Economic Advisers urged the European Central Bank to formulate strategies to normalize monetary policy.
At the same time, the pound fell to its lowest level against the U.S. dollar since December 23, as the United Kingdom and the European Union seem to be far from reaching an agreement on resolving the issue of Northern Ireland after Brexit, adding to the pressure on U.S. inflation data. .
The pound fell 1.12% against the U.S. dollar in late trading to $1.3405 after the pound fell below Friday's low of $1.3425. The pound was hit hard by the unexpected decision by the Bank of England to keep interest rates unchanged.
As traders pursued the U.S. dollar, the yen also plummeted, thus ending the four-game streak. The U.S. dollar rose 0.92% to 113.91 against the yen. Stop-loss orders were triggered above 113.5 and 113.7; before the 114 psychological barrier, The gains were slow, and the $1.4 billion option expired on Friday.
The US dollar against the Canadian dollar rose above the 200-day moving average to 1.2499, but a large number of options expiring near 1.2500 this week slowed the rise; the weakness of the Canadian dollar was affected by the more than 3% drop in crude oil prices, and the drop in oil prices returned to other commodity-linked currency belts Coming under pressure.
The Australian dollar fell 0.69% against the US dollar to 0.7327, and earlier hit 0.7324, the lowest since October 13; the New Zealand dollar fell 0.95% against the US dollar to 0.7061;
Wednesday preview
| time | area | index | The former value | Predictive value |
| 08:30 | Australia | October seasonally adjusted unemployment rate (%) | 4.6 | 4.8 |
| 08:30 | Australia | Change in employed population in October (10,000 people) | -13.8 | 5 |
| 15:00 | U.K | September's seasonally adjusted merchandise trade account (100 million pounds) | -149.27 | -143.5 |
| 15:00 | U.K | September seasonally adjusted trade account (100 million pounds) | -37.16 | -32.56 |
| 15:00 | U.K | Monthly rate of industrial output in September (%) | 0.8 | 0.2 |
| 15:00 | U.K | Annual rate of industrial output in September (%) | 3.7 | 3.1 |
| 15:00 | U.K | September GDP monthly rate (%) | 0.4 | 0.4 |
| 15:00 | U.K | Initial GDP annual rate in the third quarter (%) | 23.6 | 6.8 |
| 15:00 | U.K | Initial value of GDP quarterly rate in the third quarter (%) | 5.5 | 1.5 |
OPEC publishes its monthly crude oil market report (the specific publication time of the monthly report is to be determined, generally around GMT+8 18-21)
17:00 European Central Bank publishes economic bulletin
Summary of Institutional Views
Institutional analysis: If the yen wants to reverse its decline, the U.S. and Japan need to fall below the 112 level
With bets that the Bank of Japan will lag behind other central banks (especially the Federal Reserve) in tightening policies, shorting the yen has become a popular transaction in the foreign exchange market. According to data from the Commodity Futures Trading Commission, the level of bearishness in leveraged fund yen positions is the strongest since January 2019. Since 2021, the yen has fallen by 8.5%. Such transactions have been under pressure this month, with the yen rising about 1% in November, the largest gain among G10 currencies. John Hardy, head of foreign exchange strategy at Saxo Bank, said that at a time when the return on long-term safe-haven assets globally has fallen sharply, the yen is rising and challenging speculative positions. For the yen to properly reverse its decline from the September level, the U.S. and Japan will need to fall below 112 or even reach 111.25.
ABN AMRO: A neutral view on the trend of the pound and the U.S. before the end of the year
After a few trading days of seesaw, the pound began to find a little support. But this is hard to attribute to the fact that the Bank of England is tightening the market’s interest rate hike expectations. After the Bank of England announced its interest rate decision last Thursday, the proportion of short sterling contracts in December 2022 is still 25 higher than before the announcement. Points. It is expected that the British pound against the U.S. dollar GBP/USD will fluctuate in a wide range of 1.34-1.38 before the end of the year. Speculators do not have enough confidence to push the pound below the September support level. After the release of the UK's third-quarter GDP data on Thursday, pound trading is expected to be even more sluggish.
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