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Futures News, December 11th: Crude oil prices corrected, and positive news for the fuel oil market offered limited guidance. Downstream traders remained cautious and acted on demand, while refineries maintained a slow pace of sales. It is expected that fuel oil trading will mostly stabilize today.December 11th - Calvin Tse, Head of US Strategy and Economics at BNP Paribas: Federal Reserve Chairman Jerome Powell has served a long time and enjoys high prestige within the FOMC. Even under his leadership, three members still oppose interest rate decisions, and its hard to imagine any new Fed Chairman easily gaining unanimous approval from the FOMC members.On December 11th, in a social media interaction, Musk hinted that SpaceX might go public, following reports that the rocket maker plans an IPO in 2026. Musk responded to a post by Berger, saying, "As always, Eric is accurate." Erics post read, "This is why I think SpaceX is about to go public," and included Erics related article. Reuters reported on Tuesday that SpaceX hopes to raise more than $25 billion through an IPO in 2026, a move that could boost SpaceXs valuation to over $1 trillion.According to Huahai Qingke, on December 10, the cumulative output of the 12-inch thinning and polishing integrated machine Versatile-GP300, independently developed by Huahai Qingke, exceeded 20 units.On December 11th, a macro research report from Guolian Minsheng stated that, contrary to market expectations, neither Federal Reserve Chairman Powell nor the dot plot showed a more pronounced hawkish bias. Powell announced the resumption of short-term bond purchases and continued his previous stance on interest rate cuts, emphasizing that the Fed will make decisions based on economic data at each meeting, and that monetary policy has no fixed path. The dot plot also showed a more dovish distribution compared to September. Following the meeting, US stocks and precious metals surged, while the dollar and US Treasury yields weakened. However, regardless of the outcome, given the current interest rate level, the threshold for Fed rate cuts has clearly increased. The Fed will likely enter a period of observation in the first half of next year, with a significantly slower pace of change, and the political drama surrounding the Feds independence will officially begin.

Prior to US Data, the US Dollar Index consolidates recent gains above a 20-year high

Alina Haynes

May 13, 2022 10:13

US Dollar Index (DXY) bulls take a pause around a 20-year high, recently falling to 104.75 as sluggish markets cause consolidation of recent rapid swings, predominantly in favor of the dollar, during Friday's Asian session.

 

The dollar index has risen for three straight days to reestablish a multi-year high at 105.00. The underlying dynamics may be related to the market's anxieties about inflation and growth, as well as the Fed's faster/heavier rate hikes and covid/geopolitical concerns.

 

Nonetheless, the most recent decline in the DXY is influenced by the rebound in US Treasury yields from a two-week low, as well as moderately bid stock futures. The US 10-year Treasury yields exhibit a corrective pullback after touching a two-week low the day before, around 2.86 percent as of press time, whilst the S&P 500 Futures exhibit modest gains while licking their wounds near a one-year low.

 

The US Producer Price Index (PPI) matched expectations of a 0.5% MoM increase and kept inflation fears on the table the previous day. However, Fed Chairman Jerome Powell reaffirmed the expectation that the Fed will raise interest rates by a half-point at each of the next two policy meetings. As markets anticipate a 75-basis-point (bps) rate hike, the same factor may have caused the rates' comeback. On the same line, San Francisco Fed President Mary Daly stated, "Is it fifty, twenty-five, or seventy-five? These are matters that I'll discuss with my colleagues, but my starting point is that we don't want to go so swiftly or abruptly as to startle the American people.

 

In the future, DXY bulls will search for more evidence to validate the Fed's 75 basis point rate hike, which highlights today's preliminary readings of US Michigan Consumer Sentiment data for May, which is predicted to be 64 vs 65.2 before. Risk catalysts, such as covid worries from China and geopolitical events regarding Russia and Ukraine, are also significant for the US Dollar Index.

Technical Evaluation

Despite the recent dip, the DXY's short-term downside is supported by the November 2002 lows and the last month's high, which are near 104.10 and 103.95, respectively. In contrast, bulls are well-positioned to attempt the high of 107.31 from December 2002.

 

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