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Market News Foreign exchange trading reminder on November 18: U.S. Treasury yields fell along with the U.S. dollar, and the Japanese yen hit the largest increase in the past three months
Foreign exchange trading reminder on November 18: U.S. Treasury yields fell along with the U.S. dollar, and the Japanese yen hit the largest increase in the past three months
The U.S. dollar index fell on November 17, having previously hit 96.26, the highest since July 2020; the euro is still on the defensive, and investors adjusted their bets on the central bank to raise interest rates amid rising inflationary pressures. With the fall in U.S. bond yields, the yen against the U.S. dollar recorded its biggest gain in nearly three months, and the euro against the Swiss franc fell to its lowest level since 2015.
2021-11-18
8725
On Wednesday (November 17), the U.S. dollar index fell 0.11% to 95.79 in late trading. It had previously hit 96.26, the highest since mid-July 2020. The U.S. dollar was mixed against the G-10 currencies, as long positions were closed. The U.S. dollar hit a four-and-a-half-year high against the yen and tested the $1.12 level against the euro. It was helped by strong US retail sales data and the hawkish remarks of the Fed’s policymakers, which contrasted sharply with the dovish remarks of the European Central Bank President.
The U.S. dollar rose sharply last week after data showed that consumer prices in the United States rose the highest since 1990 in October, and this momentum continued until Tuesday. Data released on Tuesday showed that retail sales rose more than expected last month.
Edward Moya, a senior market analyst at the foreign exchange brokerage company Oanda, said that the market is now beginning to understand that the subject matter of the foreign exchange market will diverge. I think the market is going through a period of turbulence... You will continue to see the market's attention to inflation.
The current trend of the money market shows that the market has digested the possibility that the Fed will raise interest rates in June next year and then raise interest rates again in November. Data from the Chicago Mercantile Exchange shows that the probability of a 25 basis point increase in interest rates by July 2022 is 50%.
Antje Praefcke, a foreign exchange strategist at Commerzbank, said that the market believes that the key interest rate will increase in the second half of next year. For me, the US dollar is still a "buy on the dip" in the short term.
The euro was basically flat against the US dollar, falling 0.5% to 1.1264 during the session; the euro fell 0.2% to 1.0505 against the Swiss franc, the lowest since July 2015. The euro fell 0.5% against the pound to 0.83852, the lowest since February 2020; the increase in the British CPI exceeded economists' expectations, increasing the pressure on the Bank of England to raise interest rates.
After the UK data was released, the pound rose to a one-week high against the US dollar and a 21-month high against the euro as the data boosted expectations that the Bank of England’s Monetary Policy Committee (MPC) will raise interest rates as early as next month. .
The British pound rose 0.48% to 1.3496 against the U.S. dollar and fell back to 1.3487 in late trading. Simon Harvey, a senior foreign exchange market analyst at Monex, said that given how the Bank of England’s November meeting hurt traders who are bullish on the pound, the temporary rise is not surprising, if the economy Activity data shows that economic momentum is picking up, and retail sales data will be released on Friday. We believe that the pound against the dollar will be ready to return to the 1.35 mark by the end of the month, as the market begins to fully digest the Bank of England’s expectations again.
Giles Coghlan, chief analyst at HYCM, said: Although there are still many Monetary Policy Committee members who believe that inflation is only temporary, it now appears that the possibility of the central bank turning hawkish in December has increased.
The dollar fell 0.64% to 114.08 against the yen, the biggest drop since August, and rose to 114.975 intraday, the highest since March 2017.
The Canadian dollar weakened, as inflation data was in line with expectations, the U.S. dollar rose 0.41% to 1.2610 against the Canadian dollar; the Australian dollar fell 0.49% to 0.7267 against the U.S. dollar; the New Zealand dollar rose 0.09% to 0.6998 against the U.S. dollar.
21:00 2021 FOMC vote committee and Atlanta Fed President Bostic speaks on the regional economic prospects
22:30 FOMC Permanent Voting Committee, New York Federal Reserve Chairman Williams speaks
03:00 AM 2021 FOMC Ticket Committee, Chicago Fed President Evans delivers a speech 04:30 AM 2021 FOMC Ticket Committee, San Francisco Fed President Daley delivers a speech
Macquarie Group strategist Thierry Wizman said that the adjustment of the Fed’s leadership may prompt traders to increase their expectations of long-term inflation in the United States. If the market believes that the nomination of the new Fed chairman is a politicized decision, then the break-even inflation rate will inevitably rise in the long run. The market expects that the long-term inflation rate may rise slightly and the US dollar may also be affected, but it is considered temporary. The important thing is, if the current Fed Chairman Powell is not nominated, how the US government will deal with the situation, and whether the government can convince the market that the successor Brainard will adopt a similar strategy.
Economists at Mitsubishi UFJ said that they maintain their bullish tendency towards the US dollar against the Japanese yen USD/JPY and raise the forecast range to 111.00-117.00 to reflect the prospect that the Fed’s short-term interest rates may rise further, thereby further pushing the US and Japan upward. The top of the range 117.00 coincides with the long-term trend resistance, which is not easy to reach. We expect crude oil prices to fall next year (the market is expected to have oversupply before the second quarter of 2022) and supply constraints will gradually ease. This possibility means that some factors that will weaken the yen in the next one or two months Will not last afterwards. At the same time, given that the US interest rate market may rise further, it is expected that there is still room for the US and Japan to rise further.
The U.S. dollar rose sharply last week after data showed that consumer prices in the United States rose the highest since 1990 in October, and this momentum continued until Tuesday. Data released on Tuesday showed that retail sales rose more than expected last month.
Edward Moya, a senior market analyst at the foreign exchange brokerage company Oanda, said that the market is now beginning to understand that the subject matter of the foreign exchange market will diverge. I think the market is going through a period of turbulence... You will continue to see the market's attention to inflation.
The current trend of the money market shows that the market has digested the possibility that the Fed will raise interest rates in June next year and then raise interest rates again in November. Data from the Chicago Mercantile Exchange shows that the probability of a 25 basis point increase in interest rates by July 2022 is 50%.
Antje Praefcke, a foreign exchange strategist at Commerzbank, said that the market believes that the key interest rate will increase in the second half of next year. For me, the US dollar is still a "buy on the dip" in the short term.
The euro was basically flat against the US dollar, falling 0.5% to 1.1264 during the session; the euro fell 0.2% to 1.0505 against the Swiss franc, the lowest since July 2015. The euro fell 0.5% against the pound to 0.83852, the lowest since February 2020; the increase in the British CPI exceeded economists' expectations, increasing the pressure on the Bank of England to raise interest rates.
After the UK data was released, the pound rose to a one-week high against the US dollar and a 21-month high against the euro as the data boosted expectations that the Bank of England’s Monetary Policy Committee (MPC) will raise interest rates as early as next month. .
The British pound rose 0.48% to 1.3496 against the U.S. dollar and fell back to 1.3487 in late trading. Simon Harvey, a senior foreign exchange market analyst at Monex, said that given how the Bank of England’s November meeting hurt traders who are bullish on the pound, the temporary rise is not surprising, if the economy Activity data shows that economic momentum is picking up, and retail sales data will be released on Friday. We believe that the pound against the dollar will be ready to return to the 1.35 mark by the end of the month, as the market begins to fully digest the Bank of England’s expectations again.
Giles Coghlan, chief analyst at HYCM, said: Although there are still many Monetary Policy Committee members who believe that inflation is only temporary, it now appears that the possibility of the central bank turning hawkish in December has increased.
The dollar fell 0.64% to 114.08 against the yen, the biggest drop since August, and rose to 114.975 intraday, the highest since March 2017.
The Canadian dollar weakened, as inflation data was in line with expectations, the U.S. dollar rose 0.41% to 1.2610 against the Canadian dollar; the Australian dollar fell 0.49% to 0.7267 against the U.S. dollar; the New Zealand dollar rose 0.09% to 0.6998 against the U.S. dollar.
Thursday preview
| time | area | index | The former value | Predictive value |
| 10:00 | new Zealand | Inflation expectations for the next two years in the fourth quarter (%) | 2.27 | |
| 21:30 | America | As of November 13, the number of people claiming unemployment benefits at the beginning of the week (10,000) | 26.7 | 26 |
| 21:30 | America | As of the week of November 6th, the number of people who continue to claim unemployment benefits (10,000) | 216 | 212 |
| 23:00 | America | Monthly rate of leading indicators of the Consultative Chamber of Commerce in October (%) | 0.2 | 0.8 |
21:00 2021 FOMC vote committee and Atlanta Fed President Bostic speaks on the regional economic prospects
22:30 FOMC Permanent Voting Committee, New York Federal Reserve Chairman Williams speaks
03:00 AM 2021 FOMC Ticket Committee, Chicago Fed President Evans delivers a speech 04:30 AM 2021 FOMC Ticket Committee, San Francisco Fed President Daley delivers a speech
Summary of Institutional Views
Macquarie: Fed chairman change may stimulate inflation expectations
Macquarie Group strategist Thierry Wizman said that the adjustment of the Fed’s leadership may prompt traders to increase their expectations of long-term inflation in the United States. If the market believes that the nomination of the new Fed chairman is a politicized decision, then the break-even inflation rate will inevitably rise in the long run. The market expects that the long-term inflation rate may rise slightly and the US dollar may also be affected, but it is considered temporary. The important thing is, if the current Fed Chairman Powell is not nominated, how the US government will deal with the situation, and whether the government can convince the market that the successor Brainard will adopt a similar strategy.
Mitsubishi UFJ: Expected USD/JPY will rise to 117.00 before the end of the year
Economists at Mitsubishi UFJ said that they maintain their bullish tendency towards the US dollar against the Japanese yen USD/JPY and raise the forecast range to 111.00-117.00 to reflect the prospect that the Fed’s short-term interest rates may rise further, thereby further pushing the US and Japan upward. The top of the range 117.00 coincides with the long-term trend resistance, which is not easy to reach. We expect crude oil prices to fall next year (the market is expected to have oversupply before the second quarter of 2022) and supply constraints will gradually ease. This possibility means that some factors that will weaken the yen in the next one or two months Will not last afterwards. At the same time, given that the US interest rate market may rise further, it is expected that there is still room for the US and Japan to rise further.
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