Foreign exchange mt4 MT5 transaction reminder, USD / Euro analysis

On the morning of June 30, Beijing time, the US dollar index fell slightly, and it is currently trading near 105.09. The US dollar index rose on Wednesday and the euro fell after US Federal Reserve Chairman Powell said that the biggest risk to the US economy was sustained high inflation, rather than a sharp slowdown in economic growth caused by interest rate hikes.

Powell said that it is certainly possible to design tightening policies that can avoid plunging the U.S. economy into recession, but he added that the opportunity is not great and there is no guarantee of success.

Erik Nelson, monetary strategist at Wells Fargo Bank, said, "in my opinion, Powell sounds quite hawkish. He said he wants to strike first, or act before any inflation expectations break down and rise unnecessarily.

I think this may be a little deviated from the view of the market in the past few months, that is, they will respond to the rise of inflation expectations. The message from this speech seems to be that they will take the initiative rather than respond passively. "

The U.S. dollar index rose more than 0.6% to 105.1519 on Wednesday. Investors bought U.S. assets to avoid risks when global stock markets fell due to the increased risk of economic recession. However, the dollar index is still below the 20-year high of 105.79 set two weeks ago.

The US dollar closed up 0.34% against the yen at 136.582 on Wednesday. Nelson said that the latest trend showed that "the tendency to sell yen is very strong, which is attributed to the fact that the Bank of Japan is the only central bank that has not tightened its policy."

The euro fell 0.75% to 1.0438 against the US dollar on Wednesday. It is widely expected that the European Central Bank will follow its global counterparts in raising interest rates for the first time in 10 years in July to cool soaring inflation. However, economists have different views on the magnitude of the interest rate increase, which makes investors nervous.

European Central Bank President Christine Lagarde said on Wednesday that the era of ultra-low inflation before the epidemic is unlikely to return, and the central bank needs to adapt to the sharply increased price growth expectations.

The Swiss Franc hit 1.0034 Swiss francs against the euro on Wednesday, the highest since 2015, and rose 0.96% to 1.0024 at the end of the session.

Last week, the overnight cash held by the Swiss Central Bank fell by the most in more than a decade, indicating that the central bank's action to weaken the Swiss franc and buy foreign exchange has ended.

Sterling fell 0.52% to 1.2118 against the US dollar on Wednesday. Earlier, Bailey, governor of the Bank of England, said he did not distinguish between good and bad exchange rates, and was not surprised that the pound fell in the past few months. He also said that brexit will drag down the economy, and the trend growth level of the UK economy has declined, and he sought to use policy tools to cool inflation.

Key data and major events on Thursday

Major events needing attention on Thursday: the 30th ministerial meeting of OPEC and non OPEC oil producing countries was held.

Summary of institutional views

1. Morgan Stanley issued an economic recession warning for the euro zone

Morgan Stanley, a well-known investment bank in the United States, released a report on June 29, saying that the euro zone is expected to fall into a mild recession in the fourth quarter of this year. Economists at Morgan Stanley said that the reasons for predicting the euro zone economy to fall into recession were the possible reduction of Russian natural gas transmission to Europe, the decline of consumer and business confidence indicators, and the continued high inflation. Economists believe that the risks surrounding the prospects of the eurozone have increased

2. Deutsche Bank: the Bank of England is difficult to balance inflation and the economy, which is expected to limit the appreciation potential of the pound

The Bank of England is facing a difficult balance in dealing with high inflation and slowing economic growth. Under the possibility that the central bank may accelerate the interest rate hike, the appreciation potential of the pound may be limited. You Na Park Hege, a foreign exchange analyst at Deutsche Bank, said in a report that bank of England officials had said that the central bank was willing to accelerate the pace of interest rate hikes, but more decisive measures may further slow the economy. On the other hand, the Bank of England's overly cautious approach may exacerbate the inflation problem, so it is expected that the pound will be difficult to rise against the euro

3. Comoros: the economy of the euro zone will fall into recession in the fourth quarter

① Economists such as Jens eisenschmidt of Morgan Stanley said that they now expect the euro zone to fall into a mild recession in the fourth quarter of this year due to the reduction of Russian energy supply;

② Eisenschmidt believes that the eurozone economy will contract for two quarters, and then return to growth in the second quarter of next year driven by increased investment. It is predicted that the reason why the eurozone economy falls into recession is that Russia's natural gas transmission to Europe may decrease, consumer and business confidence indicators decline, and inflation remains high. The risks surrounding the future have intensified;

③ Despite the economic slowdown, eisenschmidt said that given the high level of inflation, they still expected the European Central Bank to raise the deposit rate to 0.75% at each meeting in December this year. However, they also admit that if the economic outlook worsens, the central bank may stop raising interest rates after September

4. Deutsche Bank: the dollar is stronger, and gold is under pressure

① Due to the sharp strengthening of the US dollar, the price of gold continued to fall, falling to the lowest level of $1816 / ounce in nearly two weeks. Poor US economic data seems to be the reason behind the strength of the US dollar - the unexpected sharp decline in consumer confidence index in June;

② Some investors believe that in view of the increasingly gloomy economic outlook, the Federal Reserve will not raise interest rates so significantly after all, so the expectation of raising interest rates has decreased, which will reduce the risk of recession to a certain extent. Another factor that may support the strength of the US dollar is that European Central Bank President Lagarde rejected the idea of raising interest rates by 50 basis points in July, saying that such a rate increase would not occur until September

5. Morgan Stanley: still bullish on the Swiss franc, it is recommended to short the euro against the Swiss franc

① Morgan Stanley strategists said they were still bullish on the Swiss franc and suggested shorting the euro against the Swiss franc, suggesting that the Swiss Franc would rise against the yen after the Swiss central bank further raised interest rates. The Swiss central bank has previously made it clear that it wants its currency to strengthen rather than weaken to offset imported inflation. And if the Swiss Franc depreciates, it is also possible for the Swiss central bank to sell foreign currencies and buy the Swiss Franc;

② In addition, the recent decline in PMI data and natural gas supply in the euro zone indicate that the prospects for European economic growth may also deteriorate from now on, and the euro remains under downward pressure against the Swiss Franc; Driven by differences in monetary policy, the Swiss Franc should also continue to rise against the yen.