During the Asian market on Monday, the U.S. dollar rose in the short term and approached 105.35. The U.S. dollar was boosted by the Federal Reserve's hawkish remarks at the beginning of last week and once strengthened. However, as U.S. economic data weakens, especially the rise in initial jobless claims, market expectations for an interest rate cut by the Federal Reserve have revived, and the dollar's strong position has been challenged.
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The U.S. dollar: hidden worries behind the strength
Analysts pointed out that signs of weakness in the U.S. labor market may indicate slower economic growth, which poses a challenge to the Federal Reserve's policy outlook. In addition, declining consumer confidence may also have an impact on the Fed's decision-making.
Fed officials stated their stance
Fed Chairman Jerome Powell Policymakers are likely to keep interest rates high for some time, with no signs of "stagflation" in sight in terms of economic growth or inflation.
John Williams (New York Fed President) Policy is in a very good place now and we have time to collect more funds, so it remains stable. Neel Kashkari (Minneapolis Fed President) Interest rates may need to remain at current levels for an extended period of time.
Susan Collins (Boston Fed President) Lowering inflation will take longer than previously thought. Mary Daly (San Francisco Fed President) Interest rates are currently suppressing the economy, but it may take more time for inflation to return to target.
Austan Goolsbee (Chicago Fed President) Although recent data show that price pressures increased at the beginning of the year, inflation has not remained above the target.
Analyst opinion:
Ryan Brandham (Validus Risk Management) There are growing signs that the U.S. labor market may be starting to soften. Jeff Roach (LPL Financial) The Federal Reserve is walking a tightrope as it balances its dual mandates of price stability and economic growth, with the risk of 'stagflation' rising.
Chris Zaccarelli (Independent Advisor Alliance) Lower-than-expected consumer confidence data is a warning sign, and rising inflation expectations are a double whammy for the Fed.
Don Rissmiller (Strategas) Any confirmation of volatility in the U.S. labor market could lead to a rate cut in the near term.
Chris Larkin (Morgan Stanley E*Trade) Investors may have gotten used to the idea that the Fed won't cut interest rates until September, but that doesn't mean they're willing to wait indefinitely.
The foreign exchange market faces two major challenges this week: the test of U.S. CPI and "horror data"
Looking ahead to this week, the market will pay close attention to key economic data from the United States and Europe, including U.S. PPI, CPI and retail sales data, as well as the European Central Bank's interest rate decision. These data and events will provide new guidance for the foreign exchange market. At the same time, Federal Reserve Chairman Powell's speech will also receive great attention from the market.
Barbara Lambrecht, precious metals analyst at Commerzbank, said in a report on Friday, "If (consumer) prices rise strongly again, hopes for a small interest rate cut in the near future may be frustrated again. By then, gold prices should fall again."
In addition to U.S. CPI data, some analysts said that after disappointing consumer confidence data was released last Friday, U.S. retail sales data (commonly known as "horror data") will also attract some attention from the market. Traditionally, consumers who are less optimistic about the health of the economy will spend less, which will put pressure on economic activity.
"The University of Michigan consumer confidence index has fallen again to a six-month low, which is difficult to explain given that gasoline prices are now down, stocks are back near record highs, and there is little evidence of a major labor market downturn," Paul Ashworth, chief North America economist at Capital Economics, said in a report, "This makes us wonder whether we are overlooking something more worrying for consumers. We don't think so, but the April 2019 data released on May 16 Retail data will provide more information."
Regarding the late trend of the U.S. dollar, according to analysts’ views: The indicators on the daily chart of the U.S. dollar index present a rather complicated picture. On the one hand, the Relative Strength Index (RSI) shows a positive slope but remains in negative territory. This suggests that while selling pressure is currently strong, buying momentum is slowly rising, suggesting a shift may occur in the near future.
Similarly, the Moving Average Convergence Divergence (MACD) has a flat red column, indicating that there is no strong momentum from either side. The simple moving average (SMA) also carries mixed signals. Although the U.S. Dollar Index fell below the 20-day moving average due to bearish interference, it remains above the 100-day and 200-day moving averages. This scenario shows that while bears have managed to shape the short-term trajectory, bulls still control the mid- to long-term trend.
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Indonesia
2024-05-13
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