Dollar mixed waiting for Powell’s speech

(New York = Yonhap Infomax) Correspondent Bae Soo-yeon = The value of the dollar showed a mixed trend. This is due to the higher volatility ahead of Federal Reserve Chairman Jerome Powell’s speech. The euro strengthened further. It was confirmed that inflationary pressure in the euro area (19 countries using the euro) had eased.

According to Yonhap Infomax (screen no. 6411), the dollar recorded ¥139.330 in the New York foreign exchange market at 9:00 a.m. on the 30th (hereafter US Eastern time), up 0.592 yen (0.43%) from the field price the gad of 138.738 yen in New York.

The euro moved at $1.03604 per euro, up 0.00350 dollars (0.34%) from the battleground price of $1.03254.

The euro recorded 144.37 yen per euro, up 1.07 yen (0.75%) from 143.30 yen on the battlefield.

The Dollar Index, which reflects the value of the dollar against six major currencies, recorded 106.583, down 0.25% from the previous record of 106.853.

The euro showed an upward trend, trading at one point at $1.03915, showing a bullish trend. This is because it has been confirmed that the increase in the consumer price index (CPI) in the euro area has slowed down. The euro area consumer price index (CPI) released on the day still showed a double digit increase, but the rate of increase was slower than the previous month. Eurozone CPI reserve for November rose 10.0% year on year. This was lower than the 10.6% confirmed in the previous month and lower than the 10.4% expected by experts compiled by the Wall Street Journal (WSJ). November CPI reserve fell 0.1% MoM. Excluding volatile items such as energy and food, the November core CPI rose 5.0%. Core CPI recorded 0.0% MoM.

Markets are keeping their eyes on Fed Chairman Jerome Powell’s remarks scheduled for today. This is because the possibility that Chair Powell will have an impact similar to that of Jackson Hole cannot be ruled out. In his speech from Jackson Hole in August, Chairman Powell shocked the market by saying that he would continue to raise interest rates until he was sure that inflation was under control. In this speech, it is anticipated that he will focus on dispelling expectations of the Fed’s pivot (policy transition).

Wall Street is tightening its watch even more as it expects the Fed to raise its benchmark interest rate by 50 basis points at the Federal Open Market Committee (FOMC) meeting on the 13th and 14th of next month . This is because Fed officials stepped up their hawkish comments before Chairman Powell’s speech.

Louis Fed President James Bullard recently pointed out that “the market is underestimating the risk that the FOMC will become more aggressive.” New York Fed President John Williams also emphasized, “We think we need to maintain restrictive policies for now,” and “we expect that to continue into at least next year.”

US economic data has sent mixed signals.

US private sector employment growth in November was weaker than expected on Wall Street. Employment in the private sector in November increased by 127,000 from the previous month. This is below the 190,000 expected by experts compiled by the Wall Street Journal (WSJ), the lowest level since January 2021.

In the third quarter (July-September) of this year, the economic growth rate of the United States maintained a positive growth trend (+). The growth rate for the third quarter was better than previously published breaking figures. Seasonally adjusted Gross Domestic Product (GDP) in the third quarter increased by 2.9% year-on-year from the previous quarter. This is an improvement on the 2.6% increase previously reported. A 2.7% increase was also better than the market expectation compiled by the Wall Street Journal (WSJ).

The value of the Chinese yuan has skyrocketed. The Chinese offshore yuan is trading at around 7.07 yuan, down sharply from the previous day’s closing price of 7.1427 yuan. This is because protests in major cities in China have subsided and the number of confirmed cases of the new coronavirus infection (Corona 19) is also on the decline. According to China’s National Health Commission, the number of new infections in China the previous day was 36,683 (excluding 929 asymptomatic → symptomatic reclassifications), a decrease of 794 from the 28th. On the 28th, there were 1,331 fewer new infections than on the 27th, a day before, and then a drop for two consecutive days. This is the first time since the 18th and 19th that the number of new infections in mainland China has fallen for two consecutive days.

One of the targets of criticism from protesters against “Zero Corona”, “regular total PCR (gene amplification) tests,” also showed signs of easing. Daxing District, Beijing said that in order to reduce the risk of infection due to overcrowding and save financial resources, during the PCR test on this day, the elderly who live alone at home for a long time, students who take classes online every day, babies, and domestic workers don’t get PCR tests every day unless they need to go out. He said he didn’t have to. Beijing’s Tongzhou District issued a similar notice on the same day.

“The main focus is on the new euro area CPI,” said CMC strategist Michael Hewson.

He explained that this is because the indicator can set the stage for whether we will have a 50bp or 75bp rate rise when the ECB meets in two weeks’ time.

“There is growing evidence that inflation may be close to peaking if commodity price volatility over recent months is any guide,” he said.

“The underlying message is that the Fed is not happy with the current inflation and employment situation,” said State Street’s Bart Wakabayashi.

“Powell will continue to be a hawk at the moment,” he said.

“Overall, it appears that China is preparing to move from a ‘zero corona’ policy to a ‘with corona’ policy,” said CBA strategist Kim Mundy.

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This article was submitted at 23:09, 2 hours earlier on the Infomax financial information terminal.

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