statement of events

In early trading on Tuesday, April 11, the U.S. dollar index fell slightly and is currently trading near the 102.44 price position. The dollar strengthened on Monday, with Friday’s strong employment report boosting expectations for a U.S. interest rate hike in May, while the yen weakened. The dollar rose about 1.12% against the yen in late New York trading to close at 133.615, having previously touched 133.87 and at 3 The highest since March 15th. While gold fell back below the key $2,000 level.

Event cause analysis

Friday’s strong jobs report boosted expectations for a U.S. interest rate hike in May, adding 236,000 jobs and pushing the unemployment rate down to 3.5%, a sign of the labor market’s resilience, U.S. bond yields after U.S. jobs report showed The rise comes after the pace of hiring remained strong in March, data that could provide room for the Federal Reserve to raise interest rates again. The probability of a 25 basis point rate hike next month is now pegged at 72%, boosting the dollar and making dollar-denominated gold less attractive to holders of other currencies. Rising interest rates typically reduce the appeal of non-yield-yielding gold, even though it has traditionally been an inflation hedge.

The dollar rises on bets that the Fed will raise interest rates, with recent data supporting another rate hike by the Fed. The hike would take rates to a range of 5% to 5.25%. With last week’s strong jobs report and further signs of stabilization in the banking sector, they continue to expect the Fed to raise interest rates by another 25% at its May 3 meeting. basis points and maintain the interest rate at 5.125% until the end of the year.

Consumer price data on Wednesday is the main focus of the U.S. economy and is expected to show headline inflation rising 0.3% in March, while core inflation rose 0.4%. 

The yen weakened as the Bank of Japan’s new governor, Kazuo Ueda, said he was in no rush to scale back its massive stimulus measures, arguing that maintaining the Bank of Japan’s ultra-loose monetary policy is appropriate for now as Japan’s inflation rate has not yet hit 2%. . But taking into account trends in inflation rates and wage levels, the Bank of Japan is still more likely to tighten monetary policy. The increasing difference in interest rate prospects between the United States and Japan has led to a strengthening of the US dollar against the yen. The US dollar against the yen will continue to be guided by US bond yields and is still expected to rise to 134.68. But unless U.S. CPI data surprises higher on Wednesday, USD/JPY has limited room to rise from current levels.

Last Friday’s U.S. non-farm payrolls report helped the U.S. dollar and U.S. bond yields rise. Because the market was closed last Friday, gold prices compensated for their losses on Monday. Spot gold fluctuated and weakened, falling to $1,988.79 per ounce, a three-day low. It is currently trading Invest near the price of $1993.50 per ounce. In addition, gold prices were blocked from rising last Wednesday, and short-term gold prices also face certain adjustment needs, but bargain hunting still provides support to gold prices. Investors are paying more attention to the U.S. CPI data for March and the Federal Reserve meeting minutes expected to be released on Wednesday.

Event impact

In summary, the market is waiting for the U.S. CPI data for March and the minutes of the Federal Reserve meeting to be released on Wednesday. The U.S. CPI data refers to the consumer price index and is one of the important indicators for measuring U.S. inflation. The Federal Reserve will refer to this data to adjust its monetary policy and decide on the subsequent interest rate hike policy in May, which will in turn affect the short-term trend of the U.S. dollar exchange rate. If the announced value is greater than the expected 5.6%, it will be positive for the US dollar, and the impact will spread to related currency pairs such as the US dollar against the yen, as well as the market trend after safe-haven gold.