foreign exchange

The US dollar fell from a three-month high and the outlook for interest rates dominated

On Wednesday, with Fed chairman Jerome Powell unexpectedly showing a more hawkish interest rate outlook on Tuesday. Investors adjusted the prospect of high interest rates for a longer period of time, resulting in a moderate decline in the US dollar and a drop from the three-month high.

Powell said that due to the recent strong data, the Federal Reserve may need to raise interest rates more than expected, and is ready to take more stringent measures to control inflation when the situation requires. This prompted traders to reassess their interest rate expectations.

At present, federal fund futures traders believe that there is a 66% chance that the Federal Reserve will raise interest rates by 50 basis points at its meeting from March 21 to 22, while before Powell's statement on Tuesday, the probability is about 22%. The interest rate is expected to peak at 5.62% in September.

futures

After Powell made more comments on raising interest rates, the gold price remained at a low level for nearly a week

On Wednesday, Federal Reserve Chairman Powell hinted that he would raise interest rates further, so traders adjusted their positions to prepare for his next day's statement and more economic clues, and gold prices continued to fall.

Spot gold closed at $1813.78 per ounce, slightly higher than the low of $1809.27 on February 28. US gold futures fell 0.1% to US $1817.80.

Traders now generally expect that the Federal Reserve will raise interest rates by 50 basis points at its policy meeting on March 21-22.

Oil price stabilizes after selling due to concern about interest rate hike

Crude oil prices stabilized after falling early on Wednesday, as investors worried that a more aggressive increase in US interest rates would impact demand, while the market was waiting for further clear information on inventories.

Brent crude oil futures rose 11 cents, or 0.1 percent, to $83.40 a barrel. West Texas Intermediate crude futures fell 9 cents, or 0.1 percent, to $77.49 a barrel.

On Tuesday, Federal Reserve Chairman Powell said that based on the recent strong data, the central bank is likely to need to raise interest rates by more than the market expected, which led to the decline of Brent crude oil and West Texas Intermediate crude oil futures by more than 3%.

shares

U.S. stocks fluctuated, Powell continued to state his position, and treasury bond yields slowed down

U.S. stocks fluctuated and Treasury yields fell, because a large number of strong economic data supported the reaffirmation of Federal Reserve Chairman Powell that the Federal Reserve would continue to raise policy interest rates until inflation subsided.

The major U.S. stock indexes fluctuated between weak gains and losses in quiet trading, and the dollar temporarily stopped rising after the widespread sell-off triggered by Powell's testimony on the first day of the National Congress on monetary policy.

Powell insisted on the inflation control target that the key interest rate may continue to rise and will remain high until the end of this year.

Investors weighed the remarks of Federal Reserve Chairman Powell, and treasury bond yields fell

On Wednesday, US Federal Reserve Chairman Colin Powell indicated that interest rates would be raised in the future. The yield of two-year US Treasury bonds fell slightly, and exceeded 5% earlier this week,.

The yield of the policy sensitive two-year US Treasury note recently fell 3 basis points to 4.979%. The 10-year US Treasury note fell 6 basis points to 3.915%.

The trend of yield and price is opposite, 1 basis point is equivalent to 0.01%.

Investment bank view

Credit Suisse: eur/usd: need to maintain at the key support level of 1.0483/63 to avoid inflection point

"The eur/usd is expected to break through its recent low of 1.0532, testing the 38.2% retracement of the rise in 2022/2023 and the YTD low of 1.0483/63 in early January. Our bias is that this will provide support for a wide range."

"If it falls below 1.0463, it will alert the" head shoulder top "shape and show a potentially more important downward trend. Although we still need to see the support of the 200 day moving average (200-dma) removed, i.e. 1.0328, to confirm this is true, and the next support is at 1.0223/1.0198."

"The upward trend can only be reconfirmed when it breaks through 1.0806, providing support for retesting the 50% retracement of the decline in 2021/2022, i.e. 1.0944."