Today on Tuesday (July 5th), the us dollar opened at 105.20 and closed at 105.18 yesterday. So far, the highest has touched 105.21 and the lowest has been 105.09. Temporarily reported 105.14, down 0.04%. The British pound was temporarily reported at 1.2109, an increase of 0.06%; the Canadian dollar was temporarily reported at 0.7779, an increase of 0.11%.
In early Asian trading on July 5, Beijing time, the us dollar index fell slightly and is currently trading around 105.10. Fears of a global recession have kept the dollar higher, even as markets have tempered expectations for higher U.S. interest rates. Markets are now pricing in about an 85% chance of another 75 basis point rate hike by the fed this month, with rates expected to hit 3.25% to 3.5% by the end of the year and a rate cut in 2023.
Data on Friday showed euro zone inflation hit another record high, adding to the case for the European Central Bank to raise interest rates this month. Jeremy Stretch, head of G10 FX strategy at Canadian Imperial Bank of Commerce (CIBC), said he expects headwinds from the euro to persist as the ECB raises interest rates by “just 25 basis points” on July 21.
The ECB’s action remains dovish compared to the Fed’s 75 basis point rate hike, and aside from the ECB’s monetary policy discussions, the main risk variable in the EU is related to the energy sector,” he said.
The European Central Bank may raise interest rates or drag the dollar, but the Fed’s aggressive tightening and risk aversion support the dollar. In terms of recovery, the widening gap in economic growth between China and foreign countries has supported the RMB , but the pressure on external demand is a negative factor. At the same time, coordinating epidemic prevention and control and economic development is also crucial to exchange rate stability. Guan Tao believes that it is not appropriate to arbitrarily expect the direction of exchange rates appreciation and depreciation, and should be based on risk neutrality and control currency mismatches and exchange rate exposures.
The interest rate differential driven by the divergence of monetary policy between Japan and the United States has led to the recent rapid depreciation of the yen . Currently, for the international financial market, the biggest risk is not the depreciation of the yen, but the risk of competitive devaluation in the Asian region. However, if the Bank of Japan ‘s yield curve control policy fails, resulting in a surge in Japanese bond yields, it will have a greater impact on the Japanese economy and global financial markets.