On Wednesday (August 24), EURUSD opened at 1.1766 and temporarily reported at 0.9945. The dollar index temporarily reported 108.73. USD/JPY temporarily reported 136.94. There are two reasons for the yuan’s rise, the main reason being that the euro and yen, which account for a large proportion of the dollar index, are too weak. Zhao Qingming said that the current economic fundamentals and expectations of the euro area are not good. The energy crisis has further cast a shadow on the euro area economy. In addition, high inflation and geopolitical risks are superimposed on each other. Against this background, the euro has no motivation to rise.
Many are increasingly pessimistic about the euro zone’s economic outlook as the European Central Bank embarks on a cycle of rate hikes to curb inflation. Gazprom said on Friday that it would halt gas supply to Nord Stream 1, a key European natural gas pipeline, on Aug. 31 for three days of maintenance. Gazprom said in a statement that after the maintenance work is completed, if no technical faults are found, natural gas transmission will be resumed at a flow rate of 33 million cubic meters per day.
The Bank of Japan’s July monetary policy interest rate decision continued to maintain loose monetary policy, keeping short-term interest rates at -0.1%, and long-term interest rates at around 0% through uncapped government bond purchases. Galaxy Securities analysis pointed out that the yen followed the changes in global risk appetite, and the yen depreciated by 13.7% from March 1 to the end of July, the largest decline among major currencies other than Turkey. This round of devaluation of the yen is not an independent event, but follows the changes in global risk appetite, but the Bank of Japan’s insistence on easing makes the yen more sensitive to the appreciation of the dollar, and the decline is larger.
On August 23, the US dollar index broke through the 109 mark after four consecutive days of sharp rises, returning to a 20-year high. Another Fed official hinted ahead of this week’s important Jackson Hole symposium that aggressive monetary policy tightening may continue.