The US dollar index plunged nearly 2% last Friday, the biggest one-day drop in about seven years. October's non-agricultural data was mixed, and the number of new jobs was higher than expected, but the unemployment rate rose and wage inflation fell, and the labor market showed signs of slowing down.
The dollar plummeted after the data was released. Even though the employment data is still strong, some Fed officials still support a small interest rate hike in December. With the decline of the US dollar, other major currencies gained a boost. As for the euro, it is uncertain whether the European Central Bank will continue to support the euro by raising interest rates. The euro may fall to the $0.95 level against the US dollar and remain weak for a longer period of time. The yen and Australian dollar edged red against the dollar, while sterling closed green against the dollar after a boost from other non-U.S. currencies on Friday.
1. Global FX Focus Review and Fundamental Summary
The US non-agricultural report hits the labor market remains strong, and the US dollar index has declined
According to the data of the United States on November 4th, the number of non-farm payrolls increased by 261,000 last month, which was higher than the expected 205,000. In September, the data was raised from 263,000 to 315,000. However, the unemployment rate rose to 3.7% from 3.5% in September. Job growth was stronger than expected in October, despite the Fed raising interest rates to slow a still-strong labor market. Therefore, the US dollar index fell sharply after the data was released.
The Fed raised interest rates by 75 basis points for the fourth time. Powell insisted that hawks did not rule out the possibility of continuing to raise interest rates
On November 2, the Federal Reserve raised the interest rate by 75 basis points to continue to fight the worst inflation in 40 years. At the same time, its latest policy statement pointed out that the impact of the rapid pace of raising interest rates is still evolving, and it is hoped that the federal funds rate will be controlled at a strict enough level to bring the inflation rate back to 2%. Powell said the Fed could slow the pace of a 75 basis point rate hike in December or January, but no decision has been made.
HSBC predicts that the pound will fall or come to an end. There is limited room for real interest rates to fall
HSBC said on November 2 that the pound is nearing the end of its recent downward trend. Sterling plunged to an all-time low of 1.0356 against the US dollar on September 26th. Markets are grappling with Britain's well-known structural problems, namely budget deficits and current account deficits. With UK real interest rates at their highest level in more than a decade, the gap between sterling and US rates has narrowed considerably, and some adjustments to external imbalances will be made through this channel. Therefore, it is not considered that the pound has enough support against the US dollar to fall to parity or below parity.
2. Trend analysis of foreign exchange futures and options
2.1. Trend of Important Foreign Exchange Futures Contracts (Chart)
2.2. Position analysis of futures market
According to the 2022-11-01 Futures Market Position Report released by the US Commodity Futures Commission, Last week, the reported total positions of various currencies were as follows: euro net short changed by 4,565 lots, Australian dollar net short changed by 2,642 lots, British pound net long changed by 1,904 lots, Japanese yen net long changed by 3,030 lots, Canadian dollar net long changed by 1,430 lots, and New Zealand dollar net short changed by 371 lots. Last week, there was no currency with long-short conversion of total positions. In addition, the currencies whose one-way total positions have changed by more than 20% are: Euro and Japanese Yen.
2.3. Outlook of key currency pairs
Euro/US dollar:
Euro/US dollar closed above the resistance line of 1.0100 yesterday, which may push the currency to rise further in the day and test the main target of 1.0170. However, if the Euro/US dollar falls back and falls below 0.9960, it will stop the expected upward trend and push the currency pair back to the main bearish track. On the whole, the short-term expected trend against Euro/US dollar is bullish.
GBP/USD:
Sterling/US dollar hit the bearish target of 1.1410, and then rebounded strongly, which is expected to test the bearish channel resistance near 1.1610. It is predicted that the pound/US dollar will show a bullish trend in the next few trading days, but the upward trend is temporary, and there is a high probability that the medium and long-term exchange rate will resume the bearish trend. If the pound/dollar falls below 1.1465, it will push the currency pair down again, with the first target of 1.1410. If it falls below this level, it may further fall to 1.1360.
AUD/USD:
The Australian dollar/US dollar showed an obvious upward trend in the second half of last week, and tested a small resistance of 0.6770. However, the subsequent realization momentum is insufficient. At present, it is necessary to pay attention to whether it will fall below 0.6680, which will push the Australian dollar/US dollar to the next target of 0.6600. The 4-hour EMA50 and random indicators also sent bearish signals, supporting the continued downward trend of Australian dollar/US dollar.
USD/JPY:
USD/JPY successfully hit the key resistance level of 144.90,Recent dollar/yen trading has been trapped in a small bullish flag, supporting the currency to continue to be bullish in the short to medium term, and is expected to further rise to the next bullish target of 146.20. In the short term, as long as the USD/JPY remains above 143.55, the bullish trend scenario will remain valid.
$SP500指数主连 2212(ESmain)$ $黄金主连 2212(GCmain)$ $英镑主连 2212(GBPmain)$ $加元主连 2212(CADmain)$ $SG人民币主连 2212(UCmain)$
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