U.S. Treasury Secretary Yellen: It is too early to predict the impact of the auto strike on the economy. The labor market is cooling, but there are no large-scale layoffs. There is no sign that the economy is in recession. We will pay close attention to oil prices and oil production.
On September 18, local time, according to data released by the U.S. Department of the Treasury, the total U.S. national debt exceeded 33 trillion U.S. dollars for the first time on the 18th. China’s holdings of U.S. treasury bonds in July were 821.8 billion U.S. dollars, a decrease of 13.6 billion U.S. dollars from the previous month. Reduce holdings in four months. Japan’s holdings of U.S. Treasury bonds in July were US$1.1125 trillion, an increase of US$6.9 billion from the previous month.
ECB Governing Council member Kazmir: We hope that September’s interest rate hike will be the last, but we cannot rule out the possibility of further interest rate hikes. It is too early to bet on the first interest rate cut.
Bundesbank: German economy likely to shrink in third quarter
Reuters market analyst Paul Spirgel
The pound and the US dollar hovered near recent lows on Monday, trading within the 1.2410-1.2371 range. If the risk that the Bank of England is less hawkish than expected materializes, the pound and US dollar are likely to fall towards the March and May lows. By the end of July, traders had trimmed their net long positions in sterling, with levels retreating from near 15-year highs. Since late July, extreme long sterling positions have been reduced by approximately 18,000 contracts. The main reason is that the market has lowered its interest rate expectations for the Bank of England. The market also believes that British inflation will decline at a faster rate in the future. The pound and the United States subsequently also It is down nearly 6% from its peak on July 14, 2023. This week’s Fed rate decision and the Bank of England rate decision are of great significance to the pound bulls. Although the interest rate futures market expects the Fed to keep the current interest rate unchanged, and the possibility of the Bank of England raising interest rates reaches 80%, the dovish tone of the Bank of England may Pushing the pound below the June 5 low of 1.2370. If traders further reduce long positions, the pound could revisit the May 25 low of 12308 and the March 2023 low of 1.1780.
Market Analyst Fawad Razaqzada
Sterling’s recent downward trend suggests investors are scaling back hawkish bets on the Bank of England amid weaker UK economic data. The latest CPI data will be released a day before the Bank of England’s interest rate decision. Given that economists expect CPI to rise from last month, this is unlikely to prevent the committee from continuing to vote to raise interest rates by 25 basis points. But does this rate hike mean a peak interest rate? Goldman Sachs does think so. They expect the Bank of England to pause raising interest rates in November because they expect wage and inflation pressures to have eased, allowing the Bank of England to pause raising interest rates. Investors in the current market also generally believe that the Bank of England will raise interest rates for the last time at this meeting and send a signal similar to that of the European Central Bank. Pay attention to whether the Bank of England will delete the statement from the policy statement that “if there is evidence that inflationary pressures continue to increase, further tightening of policy will be needed.” If the Bank of England clearly stated that interest rates have reached peak interest rates, as the European Central Bank did, for example by suggesting that “interest rates are tight enough”, it would suppress the trend of sterling. Similar to the trend in Europe and the United States, the pound and the United States also experienced a significant decline. Although there has been a slight rebound, technical damage has been done, and the pound and the United States have fallen below the 200-day moving average. Therefore, when the pound and the United States test the key resistance level near 1.2400, you need to pay attention to the downside risks. Like Europe and the United States, the pound and the United States may next fall below the low of 1.2308 in May. Below 1.2308, except for integers such as 1.22, 1.21, or even 1.20, there are not many obvious support references. Given the growing bearish momentum, bulls must wait for key reversal signals to emerge before looking for long trade opportunities.
Lallalit Srijandorn, FXStreet Analyst
USD/CHF was flat around 0.8970 in Asian trading on Tuesday, with the U.S. dollar index facing some follow-on selling but still holding above 105.10. Markets tend to wait and see ahead of interest rate policy announcements from the Federal Reserve and the Swiss National Bank on Wednesday and Thursday respectively. The market generally expects the Fed to pause raising interest rates. I don’t expect the Fed to surprise the market. The probability of keeping interest rates unchanged is 99%. And according to data from the CME Fed Watch Tool, the probability of the Fed deciding to raise interest rates at its November meeting has dropped to 30%. %, which could cause the USD to move lower against other currencies and act as resistance for USD/CHF. Traders can keep an eye on Federal Reserve Chairman Jerome Powell’s press conference, which could provide clues on where interest rates will go in the future. In Switzerland, the Swiss National Bank is expected to further raise interest rates by 25 basis points on Thursday, from 1.75% to 2%. The Swiss National Bank is expected to maintain its conservative stance to ensure price stability, as the country’s latest inflation rate increased by 1.6% year-on-year, which is still low. to the 2% target. Swiss trade balance data, US housing starts and building permit data will be released today. Ahead of Thursday’s Swiss National Bank meeting, market participants will be closely watching Wednesday’s Fed rate decision, events that could spark market volatility and provide a clear response to USD/CHF
European trader MONEX
Last week, the U.S. dollar index DXY rose for the ninth consecutive week, reaching above the 105 mark. However, unlike in recent weeks, the U.S. dollar index does not fully reflect the overall trend of the U.S. dollar against a basket of currencies, and there are widespread differences in the returns of currencies against the U.S. dollar in the G10 and other major economies. While the dollar continued to strengthen against growth and yield-sensitive currencies such as European currencies, it lost ground against commodity currencies and those within China’s economic sphere of influence as oil prices topped $90 a barrel and Chinese growth data showed There are signs of optimism. Starting from Wednesday, the market will have to digest the interest rate decisions of nine major central banks, including the Federal Reserve, the Bank of England and the Bank of Japan, while preliminary PMI values for Europe and the United States for September will be released on Friday. The question on everyone’s lips this week is whether the dollar’s rebound is about to run out of steam, given that the dollar’s continued appreciation is underpinned by outperformance in the U.S. economy and widening interest rate differentials. We believe the dollar is likely to advance further as the Fed is able to sell its argument that higher rates will remain in place for longer than other central banks. While we do not expect the Fed to raise interest rates, in line with broad market and economist consensus, we do expect the dot plot to show a modest tightening bias remaining in 2023, while recent economic growth data suggests that in 2024 The rate cut is expected to be smaller. Additionally, we expect Friday’s PMI data to reinforce the narrative of U.S. “exceptionalism,” especially after the ISM services index in August showed much stronger overall retail sales. Overall, market volatility is likely to be limited as we head into a busy second half of the week, but we expect the USD to edge slightly higher against most G10 peers heading into the weekend.