In the foreign exchange market, the US dollar index surged above the 105 median level, with a daily increase of nearly 1.5%, approaching a three-month high; In the US bond market, the yield curves of 10-year and two-year treasury bond remained inverted [the gap was the largest since 1981], with the former recording 3.97% and the latter closing at 5.01% [the first time since 2007].

In terms of non US currencies, the euro fell to 1.0548 against the US dollar in a volatile manner; The pound hit a new low against the US dollar since November 22nd, closing at 1.1824; The US dollar rose to 137 against the Japanese yen; The Australian dollar hit a new low of 0.6581 against the US dollar since November 10th. The Federal Reserve of Australia announced a 25 basis point hike to 3.60%, the highest level since May 2012. As of April last year, it had raised interest rates 10 times, totaling 350 basis points. The New Zealand dollar hit a new low against the US dollar since November 22nd, closing at 0.6105; The US dollar rose to a strong level of 1.37 against the Canadian dollar, marking the first time since November last year; The US dollar bottomed out against the Swiss franc and rebounded more than 1.3% to 0.9413.

The precious metal market is under pressure and weakening. Spot gold almost gave up last week's gains and closed at $1813 per ounce; Spot silver hit a new low since November 4th, at $20 per ounce.

In the oil market, US crude oil ended its past five days of continuous gains and suffered short selling, reaching $77 per barrel.

Recent key events:

Powell released a tough tone and dollar bears fled one after another.

Federal Reserve Chairman Powell sets off another market wave! Yesterday at 23:00 Beijing time, the chairman delivered a semi annual monetary policy testimony to the Senate Finance Committee. He emphasized that "high inflation is causing great difficulties", while "the effect of tightening policies has not yet fully manifested". Although inflation has slowed down since the middle of last year (mainly due to the easing of supply chain bottlenecks and a decrease in energy prices), it is still above the target level of 2%. Moreover, there has been almost no sign of a decrease in recent inflation in core services other than housing, which accounts for over 50% of core consumer spending.

The labor market remains tight. The unemployment rate in the United States recorded 3.4% in January this year, the lowest level since 1969; The number of initial claims for unemployment benefits is also close to historical lows. Given this, Powell stated that "if all data indicates that accelerating the pace of tightening is necessary," then "raising the target range for the federal funds rate would be appropriate. This also means that the final interest rate level is likely to be higher than previously expected. Fedbatch shows that the market's probability of a 50 basis point rate hike by the Federal Reserve on March 22 has increased to 69.8%, compared to 31.4% and 24.0% a day ago and a week ago, respectively.

As of the close, the US dollar index rose strongly to the mid level of 105, marking the first time since December last year; Non US currencies are experiencing short selling; For the first time since 2007, the yield of US two-year treasury bond rose sharply to more than 5% - the upside down between the yield of US two-year treasury bond and that of US 10-year treasury bond was the largest (104 basis points) since 1981; Precious metals are also suppressed by the strong US dollar, with gold prices plummeting by over 2% to $1813 per ounce; The S&P 500 index fell below the 4000 level.

Analysis of main product trends:

US dollar index

The daily chart shows that the US dollar index has fluctuated and risen, currently closing at a previous high of 105. From the MACD, the fast and slow lines slightly turn upwards, and the white kinetic energy column recovers in increments. The trend of the index is basically consistent with the changes in the kinetic energy column.

EUR/USD

The daily chart shows that the euro has fluctuated and fallen against the US dollar, currently slightly closing at a previous low of 1.0580. From the MACD perspective, the fast and slow lines are expected to form a dead fork, and the white kinetic energy column converges gently. The trend of the exchange rate is basically consistent with the changes in the kinetic energy column.

GBP USD

The daily chart shows that short positions in sterling against the US dollar are under pressure with resistance of 1.2140. From the MACD perspective, the fast and slow lines form a dead cross, with a red kinetic energy column showing mild increments. The trend of the exchange rate is basically consistent with the changes in the kinetic energy column.

USD/JPY

The daily chart shows that the US dollar rebounded against the Japanese yen and is currently stabilizing at 132.80 support. From the MACD perspective, the fast slow line gradually narrows and the white kinetic energy column gently contracts. The trend of the exchange rate and the changes in the kinetic energy column are divergent.

AUD to USD

The daily chart shows a sharp decline in the Australian dollar against the US dollar, currently under pressure from the previous low of 0.6730. From the MACD perspective, the fast and slow lines turn downward, and the red kinetic energy column recovers in increments. The trend of the exchange rate is consistent with the changes in the kinetic energy column.

NZD to USD

The daily chart shows a fluctuating decline in the New Zealand dollar against the US dollar, with current testing supporting 0.6090. From the MACD, the fast and slow lines form a dead cross, and the white kinetic energy column shrinks almost completely. The trend of the exchange rate is basically consistent with the changes in the kinetic energy column.

USD to CAD

The daily chart shows a strong surge in the US dollar against the Canadian dollar, currently testing resistance at 1.3750. From the MACD perspective, the fast and slow lines run upwards, with white kinetic energy columns showing gentle increments. The trend of the exchange rate is basically consistent with the changes in the kinetic energy column.

USD/CHF

The daily chart shows that the US dollar has stabilized and risen against the Swiss franc, currently approaching resistance of 0.9450. From the MACD, the fast and slow lines turn upwards, and the white kinetic energy column contracts gently. The trend of the exchange rate and the changes in the kinetic energy column are divergent.

gold

The daily chart shows that gold prices have fluctuated and fallen, currently under pressure from the previous low of 1840. From the MACD, the fast and slow lines show a turning direction, and the white kinetic energy column contracts gently. The trend of gold prices is basically consistent with the changes in the kinetic energy column.

silver

The daily chart shows a strong decline in silver prices, currently closing at a previous low of 20.50. From the MACD, the fast and slow lines move downwards, and the white kinetic energy column shrinks almost completely. The trend of silver prices is basically consistent with the changes in the kinetic energy column.

US crude oil

The daily chart shows that the end of oil prices has been rising continuously for the past 5 days, with a current backtesting of 77 support. From the MACD, the fast and slow lines show a turning direction, and the white kinetic energy column contracts gently. The trend of oil prices is basically consistent with the changes in the momentum column.

Key events of the day:

The Bank of Canada announces its interest rate decision.

At 23:00 Beijing time, the Bank of Canada will announce its interest rate decision until March 8th. Considering the recent signs of a slowdown in the Canadian economy and inflation, the market generally expects the central bank to remain calm and maintain its interest rate level at 4.50%.

The Federal Reserve releases a brown book on economic conditions.

At 03:00 Beijing time on Thursday, the Federal Reserve will release its Beige Book on economic conditions. At the beginning of this year, the Federal Reserve pointed out in its report that the US economy experienced sluggish growth at the end of 2022, but price increases in multiple regions have slowed down and are expected to be "further moderate" in the coming year.

Intraday economic data:

Potential impact of key data on currency pairs/commodities over time (GMT+8)

15: Monthly industrial output rate after quarterly adjustment in January, Germany

EUR/USD

18: 00

Quarterly and annual GDP rate final value for the fourth quarter of the Eurozone

Quarterly employment rate after the fourth quarter quarter adjustment in the Eurozone

21:15 ADP employment in the United States in February (10000) USD currency pairs

21:30 US January Trade Account (100 million US dollars)

23:00 Canada to March 8th Central Bank Rate Decision USD/CAD

23:30 EIA crude oil inventory for the week from the United States to March 3 (10000 barrels)

US crude oil