In early Asian trading on Friday (November 15), the U.S. dollar index fluctuated within a narrow range, staying near its highest level in more than a year and currently trading at 106.9. The U.S. dollar strengthened against major currencies on Thursday, hitting a one-year high of 107.07 during the session and rising for a fifth consecutive session. It continued to be driven by market expectations that Trump would return to the White House after winning the election. Federal Reserve Chairman Powell said there was “no rush.” Cut interest rates”, suppressing expectations of a rate cut by the Federal Reserve in December and also providing support to the US dollar.
The market expects that the incoming Trump administration will impose trade tariffs, tighten immigration policies and deepen the deficit, measures that are believed to stimulate inflation.
Edison Research projected on Wednesday that the president-elect’s Republican Party will control both chambers of Congress when he takes office in January, giving him broad powers to push his agenda.
After Trump was elected, the market has been paying attention to his appointment and believes that he will not compromise on campaign goals, whether it is tariffs or China issues. Steven Englander, head of G10 foreign exchange strategy at Standard Chartered in New York, said, “The market believes that he will Continue to implement all the things he promised to do.”
The Labor Department reported on Thursday that U.S. producer prices rebounded in October, a day after data showed consumer inflation held steady last month. The number of Americans filing new claims for unemployment benefits fell last week, a sign of a strong labor market, the Labor Department said.
Federal Reserve Chairman Powell said on Thursday that continued economic growth, a solid job market and an inflation rate that remains above the 2% target mean that the Fed does not need to cut interest rates hastily and can think twice before doing so.. Powell said that while Fed staff may begin to assess the possible impact of proposals such as tariffs proposed by Trump during the campaign, that will take time to understand and will not become clear until new laws or executive orders are in place. . Powell says there is still time before policy thinking needs to change
His remarks echoed comments made earlier Thursday by Fed Governor Coogler and Richmond Fed President Barkin.After Powell’s speech, traders reduced their bets on the Federal Reserve’s December rate cut, with the interest rate futures contract market predicting a 60% chance of a 25 basis point cut in policy rates next month, down from more than 80% the day before.
Richmond Fed President Thomas Barkin said Thursday that uncertainties such as unions reaching an agreement with employers on high wages and the possibility of imminent tariff hikes may prevent Fed officials from declaring victory in their fight against inflation. Be more cautious.
This trading day will also release the monthly U.S. retail sales rate for October (commonly known as “horror data”), which investors need to pay close attention to. In addition, pay attention to the monthly rate of U.S. industrial output in October and the speeches of Federal Reserve officials. During the Asian session, you also need to pay attention to the annual rate of China’s total retail sales of consumer goods in October and the annual rate of China’s large-scale industrial added value in October.
(Daily chart of U.S. dollar index, source: Yihuitong)
Japan weaker than market expectations, yen hits lowest level in nearly four months
USD/JPY climbed above 156 yen for the first time since July, rising 0.56% to 156.38 yen in late New York trading on Thursday.
In the Asian market on Friday, the U.S. dollar continued its gains against the yen, reaching a maximum of 156.64, a new high since July 23, because Japan’s third-quarter GDP performance was weaker than market expectations.
Data released by the Japanese government on Friday showed that Japan’s third-quarter gross domestic product (GDP) increased at an annual rate of 0.9%, a slowdown compared with the previous quarter due to tepid capital spending.
The slowdown highlights the fragility of Japan’s economic recovery as domestic demand has yet to fully pick up, while the risk of a slowdown in the U.S. economy has increased and further weakness in China could weigh on Japan’s future exports.
In the third quarter, GDP increased at an annual rate of 0.9%, which was better than the market forecast of 0.7%. The revised growth rate in the previous quarter was 2.2%. Real GDP growth from July to September was 0.2%, in line with the forecast of a Reuters survey. Private consumption, which accounts for more than half of economic output, grew by 0.9%, while the market originally expected a growth of 0.2%.
Private consumption picked up slightly compared with a revised 0.7% increase in the second quarter, suggesting rising wages are prompting households to increase spending.
Capital spending fell 0.2% in the third quarter, in line with a 0.2% decline in the Reuters poll. Capital expenditure is the main driving force behind private demand and economic growth.
The contribution of net external demand (i.e. exports minus imports) to GDP was negative 0.4 percentage points.
The Bank of Japan kept ultra-low interest rates unchanged at its meeting last month and said risks to the U.S. economy had weakened, suggesting conditions were becoming favorable for another rate hike.
The upper resistance level is between 157.00-10, with 157.09 being the highest since July 23. With more daily highs above 157, there could be more upside.
Japanese importers/speculators are buying on dips, with technical support coming from the hourly Ichimoku equilibrium conversion line at 156.06.
Analysts pointed out that Trump and the Federal Reserve have made the dollar generally stronger, making real foreign exchange intervention unlikely. Japan’s Finance Ministry may choose its moment to exert its greatest influence.
AUD/USD hovers near three-month lows, eyes China data
Affected by Powell’s cautious attitude towards interest rate cuts, the Australian dollar/US dollar hovered near three-month lows in early Asian trading and is currently trading around 0.6445; it closed 0.5% lower on Thursday, hitting an intraday low of 0.6440 on August 5. new low since.
High U.S. bond yields, weak commodities and concerns about major Asian countries continue to weigh on the Australian dollar.
The support is at the low of 0.6441 on April 23. If it falls below, it will test the low of 0.6408 on April 22.
The main support level is 0.63485-0.63625; the resistance level is 0.6490-0.6500, 0.6515-20.
China’s monthly economic activity data is awaited on Friday.
EUR/USD continues downtrend, divergent interest rate outlook puts pressure
EUR/USD is steady, currently trading around 1.0526. The exchange rate closed down 0.35% on Thursday, marking the fifth consecutive trading day of losses and hitting a new low in more than a year.
Analysts noted that interest rate divergence and Trump’s tariffs should limit EUR/USD moves.
Technically, momentum research on the daily chart declined, and the Bollinger Bands range expanded on the 21st. The 5, 10 and 21-day moving averages are falling, signaling a bearish trend setup.
Thursday’s high of 1.0583 and Tuesday’s high of 1.0663 are initial resistance levels.
The next major support is the 2023 low at 1.0448, followed by the 50% retracement of the 2022/23 rally at 1.0402.
There are 3.210 billion options expiring at 1.0500 and 990 million at 1.0550.
GBP/USD is bearish, focus on third quarter GDP data
GBP/USD held steady in Asia on Friday, now at 1.2659; the exchange rate closed down 0.35% on Thursday, hitting an intraday low of 1.2629, a new low since July 2. This trading day will release the UK’s third-quarter GDP, the annual industrial output rate in September and the UK’s seasonally adjusted monthly retail sales rate in October, which investors need to pay close attention to.
UK chancellor Reeves pledges a raft of growth-focused financial sector reforms
Bank of England Governor Bailey said on Thursday that Britain should keep trade open and rebuild its relationship with the European Union. The UK needs to be proactive and work with partners before the unrest of Trump comes.
Technically, the momentum research on the daily chart has declined, the Bollinger Band range on the 21st has expanded, and the moving averages on the 5th, 10th and 21st have moved lower – a bearish trend pattern.
Targeting June low at 1.2616, followed by the 78.6% retracement of the 2021/22 decline at 1.2541
Thursday’s high of 1.2719 and Wednesday’s high of 1.2770 are the first resistance levels.
