Bond Market Trend Reversed, USD Index Higher

Only when us yields on long-term treasury bonds increase relative to other developed economies can the dollar really benefit.

But it seems that this foundation is not solid at present. The US dollar index is close to the 100 pass.

Global

The wind and clouds surge: the US dollar is willing to overcome the 99 barrier, but then it has to go down sharply. The pound and the euro led the non US currency to turn the tide, narrowing or even completely erasing the declines in the day. The Bank of England governor Carney and the European central bank governor Della Ki's big man's speech played the role of "adding firewood to the fire".

The US dollar index plunged more than 45 points in two hours after breaking through 99 points to 99.12 highs in Europe and America, the fastest rate of decline in October 7th.

The consumer confidence index was weaker than expected, the two European central bank governor's unexpectedly hawkish speech tone and the us ten year treasury bonds were snapped up, leading to a sharp fall in the US dollar index.

Data released by the world's largest enterprise Research Institute (/Conference Board) showed that the US consumer confidence index in October was lower than last month, and was not as good as expected.

In October, the US consumer confidence index was 98.6, estimated at 101.0,9, 103.5 after menstrual correction, and the former value was 104.1.

The survey is a barometer of consumer confidence and is closely watched as an indicator of consumers' confidence in the business situation, short-term prospects, personal finances and employment.

"Consumer confidence dropped in October, after a continuous monthly growth," said Lynn Franc, director of world economic research and economic indicators.

"Consumers' assessment of the current business and employment situation has declined, which will have a bright prospect for the near future.

It has also declined, but the expectation for the coming months is basically unchanged. "

Although asset prices did not react for the first time, about half an hour later, the US dollar index rose partly, and the overall market risk aversion increased.

Another big reason for the dollar's decline is the reversal of bond market movements.

The yield on us 10 - year treasury bonds hit 1.785% highs earlier, but then dropped to 1.740% soon afterwards.

At the same time, the stock market trend is also turning sharply.

The WEEX team believes that the argument that the Fed's rate hike is expected to push up the yield of US Treasury bonds and support the US dollar has been misunderstood by most analysts, because the short-term interest rate of the US dollar increases relative to other currencies, but it does not directly push up the US dollar.

Nicholas Gartside, chief investment officer of Morgan's fixed assets business in London last week, said in an interview in Tokyo last week that the Federal Reserve will only raise the terminal interest rate to around 1%, and the next time it will raise interest rates will be in December.

It also points out that the tightening of the "glacier movement" policy means that the rally in the US dollar since the middle of August has come to a full stop. The benchmark yield of the US 10 year treasury bond is likely to fall to 1.5% from the current 1.77% in the coming year.

Meanwhile, the governor of the Bank of England and Carney, President of the European Central Bank, made a speech in, and the pound and the euro rebounded strongly.

Carney made a statement on the impact of the referendum on Europe's economic production in the British House of Lords Economic Affairs Committee.

Carney warned that if the independence of the Bank of England is questioned, the risk premium of UK assets will rise.

At present, the relationship between the Bank of England and the British government seems tense, after Prime Minister Teresa May warned that quantitative easing policy had a negative impact on depositors and pensioners.

Carney counterattacked that he would not "accept orders" on policy issues.

Carney said that the government set a goal of maintaining price stability for the Bank of England. Next, the central bank's decision makers will decide for themselves how to achieve this goal.

"This is the policy process currently followed by the Bank of England. If this process is questioned, a series of UK assets are expected to have a risk premium, and the risk premium for money, British debt and inflation expectations will be the most significant," he said.

Carney also said the Bank of England will consider the weakness of the pound at next week's meeting.

Analysts said the speech threw cold water on expectations of the Bank of England's recent cut in interest rates, and also led the ECB to tend to a more active relaxation of policy expectations.

The Bank of England said in early September that if the economy slows down as expected, it may cut interest rates again this year.

At the time of Carney's speech, the GBP / USD rebounded to 1.2160, still down 0.6% during the day, hitting the lowest level 1.2082, or 1.2%, since October 7th.

(pound / USD 30 minute chart, source: FX168 financial network)

"Carney's speech has cast doubt on the prospects for European policymakers to relax their policies," said Kathy Lien, managing director of BK Asset Management.

She said traders might back up the euro and Sterling short after Carney's speech, causing the euro to rebound against the dollar, and the pound fell against the US dollar.

Traders pointed out that after Carney said he would have to take the pound exchange rate down into the policy consideration, the pound rebounded.

In view of the sharp drop in the past few weeks, investors excluded the possibility of a reduction in interest rates by the Bank of England in the short term.

The fall of the pound triggered inflationary pressure and drove investors to sell British debt.

The focus of this week will be the third quarter economic growth figures released on Thursday.

In the central bank, Delaki said that today's monetary policy is to protect the interests of depositors by accelerating the contraction of output gaps and protecting the economic potential of depositors' income; however, if the actual returns are further higher, other policies are needed to increase investment and productivity, thereby supporting monetary policy.

Delaki also said that we are certainly unwilling to keep interest rates at a low level for a long time and will withdraw from the current ultra loose monetary policy after reaching the inflation target.

The ECB's current monetary policy measures are not a new normal, but he reiterates that he will retain "a very large monetary easing policy" in achieving inflation targets.

During the speech of Delaki, the euro / dollar moved to the level above the level of the stock market as early as seven and a half months low 1.0848 and reached a high level within 1.0904 days.

In addition to a strong rebound in the pound and the euro, spot gold has also regained its momentum.

As the US dollar fell, spot gold rose to 1%, to $1276.67 / ounce, the highest in October 5th.

Robin Bhar, head of metals research at faxing bank, said: "

In India, the market is obviously supported by physical purchases, and the price of gold is slightly higher.

He index, higher premium is the signal of physical gold purchase.

MKS Pamp said in its report that gold has been supported by technology in the position of $1250-1260 / ounce and prevented the decline.

"Because the market has put the probability of 70% of the Federal Reserve's rate hike in December, it is difficult for gold to drop too much from its present position in the short term."