A Strong Dollar Or A Change Of Course?

On Friday (March 20th), investors in the market began to regress to rationality after a big shock on Wednesday and Thursday. More investors believe that on Wednesday, the Fed's decision explicitly told the market that the pace of the Fed's interest rate hike has slowed down, and that the timing of raising interest rates is likely to be substantially pushed back. This sentiment suppressed the dollar's fall again on the last trading day of the week, and the US index finally dropped to the 98 pass, which is the worst in two years. At the same time, the volatility of other markets is also mainly due to the dollar factor, which rose to 1.08 against the US dollar, and gold rose 1.2% on Friday, the largest weekly gain in two months. Oil prices rose and U.S. crude oil rose 4%.

Raising interest rates temporarily alleviated the strong dollar. This week, the market has been ups and downs. The trend of the US dollar index is also twists and turns. The main reason is that the Fed's unexpected dovish resolution has changed the mindset of the market investors. The market eased concerns about the Fed's interest rate hike, which made the strong dollar no longer swell for two consecutive weeks. Meanwhile, the nerves of European and American stock markets also temporarily relaxed. The FTSE index hit a record high of 7000, and the Dow rose 2% this week.

Jens Nordvig, head of global foreign exchange division at Nomura, said: "since the Fed's March monetary policy meeting, the US dollar has fallen sharply, which is a major reason for the US Federal Reserve to sharply reduce interest rate forecasts. This shows that the Fed is quite sensitive to the large fluctuations in the US dollar, and the further strengthening of the US dollar may further delay the tightening of the Fed's policy. "

On Wednesday, the Federal Reserve deleted the wording of patience on the timing of raising interest rates, but lowered its economic growth expectations and interest rate expectations, suggesting that the Fed would not rush to tighten monetary policy. The Federal Reserve will reduce the expected median value of the federal funds rate at the end of this year to 0.625% from 1.125% in December, a decrease of 50 basis points, while the December forecast was 25 basis points lower than that in September. Therefore, the change of the 25 base points is regarded as a standard. The decision makers actually removed a rate increase during the meeting from September to December and removed two interest rates during the meeting from December to March.

This is very evident in the US bond market. Yields on US Treasury bonds fell again on Friday, but higher than the recent low of several weeks. The easing of monetary policy by the US and the European Central Bank prompted traders to resume their buying of U.S. Treasury bonds, and many traders closed their profits on Thursday.

Cantor Fitzgerald analyst Justin Lederer said, "investors think the Fed is very cautious. Today's US debt price trend reflects this." Another analyst said that on Thursday, after the profit was closed, traders repurchased the bonds, believing that the Federal Reserve might keep interest rates low until at least September.

Lee, a foreign exchange analyst at BTM-UFJ, said: "the US dollar is still responding to the Fed meeting, and the Fed statement has created a new trend for the market. The bets against the US dollar before the market are one-sided, but the trend of the Fed meeting to the US dollar has increased more risks."

However, the US dollar's round down trend does not mean that the US dollar's medium-term strength is reversed, and the strong dollar has changed its course. Obviously, the strong dollar has not changed in the medium term, because the difference between the central bank policy and the European Central Bank is very obvious.

Mark Luschini, chief investment strategist at Janney Montgomery Scott, said: "this is only a correction of some callbacks in the US dollar. It is temporary. I still think the dollar will strengthen, especially when you consider that some other central banks are either cutting interest rates or implementing some form of quantitative easing policy.

The US dollar index again fell below the 98 pass on Friday. The dollar index weakened, mainly because of the softening of the Fed's policy of raising interest rates in the future, which depressed the popularity of the dollar.

In the market to the Federal Reserve policy steering node, the Fed's two doves officials on the floor to speak, strike while the iron, once again pressure on the dollar.

Fed fed Doyen official, Atlanta Fed chairman Lockhart said in a speech, he pointed out that in 2015, the US economic growth rate will slow down, but in 2016 and 2017 will ease down, the interval is 2.5-3%, the economy releases complex signals, including inflation, manufacturing and housing market. For the market interest rate hike time, Lockhart said, feel that in the 6-9 month interval interest rate increase is appropriate, unless the economic data decline, uncertain will increase interest rate in September, the Federal Reserve has seriously consider June, July and September policy meeting to raise interest rate possibility.

Evans, another fed dove official of the Federal Reserve, has also appeared again. Evans pointed out that interest rates had not been raised until 2016, and FOMC maintained that the decision to increase interest rates by data would remain unchanged. He also said that the FOMC statement in March was "pretty good". Before raising interest rates, the Fed must ensure that inflation is picking up. But waiting for inflation to raise interest rates is a risk of waiting time.

Within days, US economic data is scarce, and its impact on the market is limited. The only published data show that the United States in March 13th week ECRI leading indicator 131.1, the former value of 131.6.

A report released by Fitch Fitch announced that the US GDP growth rate was expected to be 3.1% in 2015, and that private consumption in the US was driven by low oil prices, high household disposable income and a strong job market. US exports may be constrained by the strong US dollar.

The euro rose to 1.08 against the dollar, which helped to ease the FED dove policy and Greece's problems. The euro strengthened against the US dollar, mainly thanks to the Fed dove policy and the easing of Greece's problems. The Fed's position on Wednesday's resolution expressed the dovish stance, which made the rally in the first two weeks of the dollar temporarily in the paragraph. The second half of this week was quite volatile in the market, but sentiment in the market continued to see more dollars, and the US dollar fell back to support the euro.

The market once again raised the issue of Greek debt, but sentiment on Friday seemed to ease. Greek Prime Minister Tsipras assured European Union creditors at the crisis talks late Thursday in Brussels that the government would soon submit a comprehensive economic reform plan. Tsipras's move is aimed at obtaining aid funds to avoid Greek bankruptcy. On Wednesday (March 18th), Tsipras asked the European Union to stop "unilateral action".

On Friday, Plath held a news conference in Brussels, saying that political consultation is the key to bringing the Greek negotiations back to the right track, and that Greece will implement reforms. He also said that the EU summit acknowledged that there was a human rights crisis in Greece, and that the conclusion of the EU summit was positive for Greece. He said that at the meeting yesterday, Delaki, the governor of the European Central Bank, played the role of consultant. Delaki once said that he felt more optimistic after the meeting. Greece is paying off its soon to maturity bonds and repaid IMF loans last week.

The Wall Street Journal quoted two government officials as saying that Greece paid the International Monetary Fund about 340 million euros in installments on Friday. So far, Greece has paid nearly 1 billion euros of the total of 1 billion 500 million euros to be paid to IMF this month.

German government spokesman Wirtz said the list of Greek reforms does not need to be ready next Monday. Germany's position on the Greek issue has not changed. Germany wants Greece to stay in the euro area. German Chancellor Merkel and Greek Prime Minister Tsipras will meet in Berlin next Monday.

The rating agency's S & P's upgrades to Portugal's rating outlook also support the euro. The report released by the S & P pointed out that Portugal's rating outlook was positive until it was considered stable, with a current rating of BB and a positive outlook on Portugal's rating, indicating that S & P may raise Portugal's long-term rating.

In terms of data, eurozone economic data for the day are right. Market impact Relatively limited. Germany's PPI rate decreased by 2.1% in February, down by 2% and 2.2% in the previous period, while the euro zone's current account surplus was 8 billion 200 million euros in January and 35 billion 200 million euros in the previous value.

Gold prices rose 1.2% on Friday, the biggest weekly gain in two months. Spot gold prices hit a two week high, recording the largest weekly gain since mid 1, because the Fed's cautious attitude to raising interest rates suspended the dollar's rise and triggered a full buying of commodity markets. Gold prices rose more than 2% this week, rebounding from the four month low on Tuesday.

Spot gold rose 1.2% Friday to $1184.55 an ounce, hitting 1187.80 highs in the session. In April, US gold sales rose 15.60 US dollars to 1184.60 US dollars per ounce. Spot silver outperformed other precious metals, hitting a monthly high of $16.89, the latest rise of 4.7%, to $16.85.

"Today's trend is part of a general rebound in commodity markets triggered by a weaker dollar," said Eli Tesfaye, senior marketing strategist at RJO Futures.

"The rise in gold prices is closely following the decline in the US dollar, and the focus of Europe's attention shifted from political issues to the ECB's stimulus policies," said Colin Cieszynski, chief market strategist at CMC Markets.

In the real market, China needs to maintain stability, and the gold price premium of Shanghai gold exchange held at a high level of US $6-7 per pound on Friday. Continuous real purchases may further support gold prices.

In addition, the gold price of London Bullion Market Association (LBMA) on Friday replaced the historic London gold fixed price. The first LBMA gold price was closed at $1171.75 an ounce.

Oil prices rose, of which US crude oil was up 4%. The uncertainty of US interest rates dragged down the US dollar and boosted demand for us dollar denominated commodities. Brent crude oil contract closed up $0.89 in May, at $55.32 a barrel. This week rose 1.2%; US crude oil futures in April rose 1.76 dollars, or 4%, at $45.72 a barrel. The increase was 2% this week.

This week, Brent crude oil futures closed for two weeks and the US crude oil futures rose for the first time in five weeks. Iran has not yet signed a nuclear agreement with western countries to support oil prices, because sanctions that appear to be exported to Iran will continue.

The current main contract is about to expire after the end of the trading day, which has greatly exacerbated the fluctuation of prices and further increased the action on the market. Traders and investors are trying to narrow the gap between the April contract and the May contract for the expiry of the US crude oil, which will become a new contract from Monday.

Research Director of Nomura Securities Gordon Kwan According to the report, executives from oil service companies predict that by the end of March 2016, the average price of Brent crude oil futures in Beihai will be $75 per barrel. The expectations of the industry executives are in line with the bank's expectations. Nomura believes that the recent decline in crude oil prices has made the business environment difficult, but it is still expected that the average price of Brent crude oil futures in Beihai will reach $70 per barrel in 2016.

Tim Evans, an energy futures expert at Citi Futures, is talking about global stones.