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On September 17th, Robert Sorkin, chief U.S. economist at PGIM, stated that the latest Federal Reserve meeting signaled that the Fed could implement three rate hikes, or even more if necessary, with just a slight push. This rate hike was hawkish, signaling another rate hike this year. Of the 18 Fed officials who submitted forecasts, eight expect three rate hikes in this cycle by the end of 2027. In a report, Sorkin noted that Fed Chairman Warshs mention of the Fed "withdrawing some easing measures" suggested that he and other participants viewed Wednesdays action as merely a small step towards tightening financial conditions, implying further action is possible. Sorkin added that the risk of further Fed rate hikes remains high if inflation continues to be high.On September 17th, Futures News reported that Zhang Guoqing, member of the Political Bureau of the CPC Central Committee and Vice Premier of the State Council, stated in his concluding remarks that it is essential to thoroughly study and implement the spirit of General Secretary Xi Jinpings important instructions and the requirements of Premier Li Qiangs speech, and to earnestly enhance the sense of urgency, responsibility, and mission in developing advanced manufacturing. He emphasized the need to focus on key areas and crucial aspects, deeply implement the high-quality development action plan for key industrial chains, vigorously develop next-generation intelligent manufacturing, accelerate the upgrading and integrated development of the industrial system, and solidly promote the implementation of various tasks. He also stressed the importance of better leveraging the role of market mechanisms, accelerating the construction of a high-quality standard system, continuously rectifying disorderly and irrational competition, actively helping enterprises solve practical difficulties, and striving to create a favorable ecosystem for the development of advanced manufacturing.On September 17, the Pakistani Foreign Ministry issued a statement on the evening of the 16th, saying that Pakistan summoned the Chargé dAffaires ad interim of the Indian High Commission in Pakistan that day to lodge a strong protest against the "highly provocative and unacceptable behavior" taken by an Indian Navy vessel in Pakistans Exclusive Economic Zone on the 15th. The statement said that during the Pakistani Navys biennial routine exercises, the Indian warship took provocative actions at extremely close range towards a Pakistani warship, resulting in a contact between the two vessels. This action seriously violated the relevant agreements signed by both sides and could escalate regional tensions. The statement urged India to strictly abide by international law and bilateral agreements, especially those aimed at preventing maritime conflicts. The Chargé dAffaires ad interim of the Pakistani High Commission in India will lodge the same protest with the Indian Ministry of External Affairs.Japanese Finance Minister Satsuki Katayama: No comment on the Bank of Japans policy.Japanese Finance Minister Satsuki Katayama: The Bank of Japan is expected to work closely with the government to implement appropriate monetary policy in order to achieve the 2% price target.

Dollar Index: Bears Continue to Dominate Below 102.00

Alina Haynes

May 30, 2022 17:02

 截屏2022-05-30 下午4.54.16.png

 

The greenback, as measured by the US Dollar Index (DXY), continues on the defensive after Monday's recovery from lows in the 102.40-35 range.

Multi-Week Lows for the US Dollar Index

The index loses ground for the third consecutive session at the start of the week, remaining below the 102.000 level and despite a widespread preference for riskier assets among investors.

 

On Monday, no US market activity should leave the price action at the mercy of global risk appetite trends, as market participants continue to evaluate the various moves the Federal Reserve could take to normalize monetary conditions, primarily through interest rate hikes.

 

Monday's US schedule is barren, with just C. Waller (permanent voter, hawk) scheduled to speak during the NA session.

What to Search for Regarding USD

The dollar retreated to multi-week lows at the conclusion of last week due primarily to investors' tilt toward riskier assets.

 

Also weighing on the dollar was the view that inflation may have peaked in April, which supports the notion that the Fed may not need to be as active in hiking Fed Funds rates as market players anticipate.

 

In the meantime, the Fed's divergence from the majority of its G10 peers, geopolitical turbulence, rising US rates, and a potential "hard landing" of the US economy are all factors that will continue to favor a stronger dollar in the coming months.

 

House Price Index, CB Consumer Confidence (Tuesday); MBA Mortgage Applications, Final Manufacturing PMI, ISM Manufacturing, Construction Spending, Fed Beige Book (Wednesday); ADP Employment Change, Initial Claims, Factory Orders (Thursday); Nonfarm Payrolls, Unemployment Rate, Final Services PMI, ISM Non-Manufacturing (Friday); and Nonfarm Payrolls, Unemployment Rate, Final Services PMI, ISM Non-Manufacturing (Friday).

 

Back burner issues: Powell's "softish" landing... what does that mean? Increasing geopolitical tensions with Russia and China. The Fed's more aggressive path for interest rates this year and in 2023. US-China trade dispute. Future of the Build Back Better plan by Biden.

US Dollar Index Relevant Levels

Now, the index is falling 0.08 percent at 101.55 and the next support level is at 101.38 (30-day low for the month of May), followed by 101.11 (55-day simple moving average) and 99.81. (weekly low April 21). In contrast, a breach of 105.00 (13 May 2022 high) would pave the way to 105.63 (11 December 2002 high) and then 106.00. (round level).

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