China'S Rate Hike Has Subsided &Nbsp; The US Dollar Recovered On Wednesday.

Beijing time on the morning of October 21st,

At the close of the foreign exchange market, the US dollar index for tracking six major currencies was 77.22 points, or 1.24%.

The euro rose to $1.3958 against the dollar, up 1.55%.

The euro fell to 1.3% against the dollar on Tuesday, the largest single day decline since the end of August.

For the Japanese yen, the US dollar closed at 81.18 yen, or 0.49%.

The US dollar against Japanese yen hit 80.82 yen in mid day on Wednesday, and again approached the 79.75 yen level of 15 years low.

Brown Brothers Harriman Ltd analysts pointed out in the report that as long as US Treasury yields fall ahead of Japanese bond yields, the yen will continue to appreciate.

The Fed's brown leather book released Wednesday did not ease the market's speculation about the Fed's new round of quantitative easing measures.

GFT currency director Casey lien believes that today's brown leather book is very similar to last month's report. "The Fed is very pleased with the fact that the economic situation has not deteriorated seriously in the past month.

This also makes us more confident that the Fed will introduce a diluted version of quantitative easing policy, and that is coming November.

On Tuesday, investors resumed the usual pattern of selling risky assets such as stocks and commodities.

This has also prompted foreign exchange traders to reverse their short positions against the US dollar.

All this is almost a knee jerk reaction to the PBC's announcement of raising interest rates: China's tightening policy will reduce the country's economic growth and drag global economic growth.

However, the dollar reversed its trend on Tuesday on Wednesday.

Some analysts pointed out that in the market downturn, there will be strong temptation to buy high yield currencies.

But they also warned that the bearish position on the US dollar has been very large, that is to say, there may be a rebound effect of the US dollar's back-up position in the near future.

"If everyone wants to buy" high yield "currencies, the only thing that can slow down investors is the fact that the" dollar dropping "paction is already very crowded," said Jeter Jiang, who is head of foreign exchange strategy at Societe Generale Bank. "

"We strongly recommend that investors carefully consider the opportunity to adjust their positions," he stressed in his customer report on Wednesday.

Meanwhile, George Osborne, the chancellor of the exchequer, stressed that Britain will strictly abide by the timetable for government spending cuts.

Andrew Bask, global monetary strategist at BMO capital market, said that most of the British budget cuts came from spending cuts.

This is probably the best choice for future economic growth. "

The pound traded against the US dollar at $1.5855 on Wednesday, up 0.94%, and the euro gained 88.04 pence, or 0.60%, against the pound.

Earlier Wednesday, the Bank of England released a summary of its October policy meeting, which showed that there were three divergences in the interest rate decision making and the so-called quantitative easing policy.