The US dollar index once again fell back to the rhythm of unilateral strength after entering North America on Thursday. At the same time, non-US currencies, especially the European currencies Euro and British pound, were under pressure. The international exchange market seems to be returning to the weak rhythm of the US, Europe and Europe that everyone is familiar with. The fact that the European Central Bank officials’ speeches and the Fed’s policy decisions issued one after the other revealed their respective psychological conditions, and also gave the most accurate fundamental notes for the current market.
The Fed’s resolutions are constantly changing, and interest rates will continue to rise in 2019.
This week, the Fed’s policy meeting was forced to postpone a day’s change from Wednesday to Thursday. The US dollar index was once under pressure and fell below the 96 mark. However, many investors immediately put the treasure on the Fed. They believe that considering the Fed’s policy independence, the split of the Congress and the change of control of the House of Representatives are not enough to shake the Fed’s road map to continue to implement the austerity policy. And the facts confirm their prediction.
The Fed announced in its latest policy statement that it will maintaininterest rateBetween 2.00% and 2.25%, the committee members unanimously agreed to maintain thisinterest rateUnchanging decision. At the same time, the policy statement also decided to maintain the excess reserve rate unchanged at 2.20% and maintain the discount rate unchanged at 2.75%. At the same time, the Fed said that information received since the last meeting of the Federal Open Market Committee (FOMC) in September showed that the labor market continued to strengthen and economic activity continued to grow strongly;
The above policy decisions are completely expected in the market. Overall, the wording of the Fed's November policy decision was limited compared to the previous September, and it continued to highly positively evaluate the fundamentals of the US economy, especially the employment situation. Although the Fed did point out that there are concerns about the signs of slowing down investment activity, it is not enough to shake the overall positive sentiment of the market.
Although the Fed still has room for future policy prospects, it just said that if there is no “significant deterioration” in the fundamentals, it will raise interest rates again in December, but investors have come back to interpret the recent US After the economic data, it is impossible to find any clues that the economy is about to "significantly worse." This means that the fourth rate hike in the year can be regarded as a matter of ironclad.
As a result, the market gave an immediate response. The US dollar index hesitated at the time of the release of the interest rate decision, but since then it has risen to a new high in the week after being positively interpreted by the market. For the future policy prospects, the latest interpretation given by industry organizations is that the Fed will continue to raise interest rates four times in 2019. Although US President Trump has been dissatisfied with the Fed’s policy action of raising interest rates too fast and regarded it as the chief culprit of the US stock market crash in October, the White House has not been able to directly intervene in the Fed’s monetary policy.
Moreover, the surge in US stocks in the past two weeks also seems to indicate that the bull market has not ended with the Fed raising interest rates, which also gives the Fed more enthusiasm to implement further tightening policies in the future. Although the US stock market was slightly under pressure during the day with the release of the Fed's resolution, the market quickly digested the impact and basically closed at the end of the session.
The European Central Bank is still lacking in strength, and the situation in Italy and the United Kingdom has dragged down the European currency.
In fact, before the release of the Fed's policy decision, the trend of the US dollar relative to non-US currencies, especially the European currency, has already taken shape. This is because there is a buying operation in the market, and on the other hand, investors are interpreting the chewing. After the European Central Bank’s previous economic report, it can only choose to give the euro zone and even the entire European economic outlook a big shake.
The European Economic Bank’s economic bulletin released on Thursday said that the global economy is facing a new round of downside risks, especially in the euro zone, which is somewhat less than expected. In this regard, the European Central Bank Executive Committee Villeroi explained: The European economy faces serious external risks, the outlook is uncertain, and internal employment growth is still slow. Later, he even said pessimistically that the euro zone may have missed the window of opportunity for reform.
Later, European Central Bank President Mario Draghi apparently insisted that “the euro zone’s economy is in good shape”, but he was also forced to admit that the overall financial situation of the euro zone is facing challenges. Once the outlook deteriorates, the ECB will need to adjust its outlook. Guidelines. Overall, the ECB’s interpretation of the economy is much more pessimistic than the Fed’s, although Draghi said that it’s no surprise that the ECB will end its net purchases at the end of the year, but only when it starts to raise interest rates The word is not mentioned, which means that the monetary policy gap between the two sides of the Atlantic will be further widened in the foreseeable future. The resulting cross-border liquidity of funds also means that the downward pressure of the euro against the US dollar is still long-term. .
Although Draghi deliberately avoided the current predicament of his native Italy, and talked about the risks faced by Ireland, the member of the euro zone, which was the first to bear the brunt of the Brexit storm in the UK, the EU decision-making has obviously not let go. This "European pig" country is facing the risk of "big but not down". In the day, the autumn budget report given by the European Union described Italy's economic prospects as extremely bleak. The situation of the double policy front is further aggravated. After the European Union issued a report, the IMF also fell to Italy, the country’sGDPThe growth rate is expected to be adjusted below 1%.
Italian officials have once again given a tough response, saying that “the budget will not be revised”, which in turn has been refuted and criticized by EU officials, EU Economic Affairs Commissioner Moscow declared that if Italy withdraws from the euro zone Will not have the future. Austrian Prime Minister Kurtz also said: Italy's budget is not suitable for Italy and the EU.
This time, the investor’s anxiety about the international political situation has turned from the United States back to Europe. As a result, the European currency has re-entered the pressure track. The euro against the US dollar attacked 1.15 on Wednesday and failed to retreat on Thursday. Lost the 1.14 mark and once fell below this Monday's low of 1.1354. As mentioned above, the gap in the fundamentals of monetary policy, together with the uncertainty of the internal economy of the important member states of the euro zone, means that any short-term rebound of the euro against the dollar in recent days is only a good opportunity for short positions.
The pound, which had previously outperformed the euro because of the progress of the Brexit, was also revived on Thursday in the context of a stronger dollar. Since last week's Brexit Minister Rab announced that he will reach a Brexit agreement on November 21, there has been no further significant progress in the past week. This has caused market patience to start to run out and doubts have risen again. In the day, a rumor that the British government still has differences on the issue of Brexit has made the pound exchange rate even more difficult. After hitting a new high of 1.3175 on Wednesday, the pound has fallen again to 1% against the dollar. Europe has not yet progressed, and the confidence of the foreign exchange market may once again face a dramatic collapse.
(Article source: Huitong.com)