ATFX global foreign exchange market: the US index continued to fluctuate slightly, and the Australian dollar appreciated sharply due to interest rate hikes

atfxForex market: Yesterday, the US dollar index rose by 0.12% to close at 104.14 points, during the same period: the euro depreciated by 0.18%, closing at 1.0693 points; the yen depreciated by 0.05%, closing at 139.63 points; the pound depreciated by 0.08%, closing at 1.2424 points; the Australian dollar appreciated by 0.83%, closing at 0.6672 points; the Swiss franc depreciated by 0.15%, closing at 0.9076; the New Zealand dollar appreciated by 0.15%, closing at 0.6078 points; the Canadian dollar depreciated by 0.31%, closing at 1.3402 points.

The Australian dollar's sharp appreciation was mainly due to the Reserve Bank of Australia raising the base rate by 25 basis points more than expected, lifting it to 4.1%, the highest since 2012. The Reserve Bank of Australia said the purpose of raising interest rates was to reduce household spending and thus reduce inflation. Nominal CPI prices fell after energy and food prices fell, but core CPI prices remained strong due to strong demand. The Federal Reserve's approach of pushing up the base rate to curb aggregate demand for goods was the common choice of global central banks before the US banking crisis. However, with the collapse of the First Republic Bank of the United States and signs of a global recession intensifying, the central banks of the world's major economies are considering stopping interest rate hikes. Against this background, the Reserve Bank of Australia's firm interest rate hike surprised the market. New Zealand has close economic relations with Australia, and the New Zealand dollar has shown signs of strengthening along with the Australian dollar. The yen and sterling showed strong anti-devaluation characteristics yesterday.

The strong rise of the US dollar index far exceeded expectations. In the turning period when the Federal Reserve is about to stop raising interest rates, there is still no significant depreciation trend. It hit a low of 100.78 this year in April, and then rebounded all the way, and has now stood at the 104 mark. The results of the latest Fed interest rate decision will be announced on June 15, and the market generally expects that the interest rate ceiling of 5.25% will remain unchanged. If the US dollar index can still close at a positive line on that day, the negative effect of the Fed's monetary policy shift on the US dollar index will be reassessed. From a long-term cycle perspective (monthly line), the US dollar index rose to 114.79 in September 2022, and the price is already within the historical high range. From the perspective of cycle turnover, the probability of the US pointing to a low range (below 100) in the future is high.

The Australian dollar is a commodity currency, and the value of the currency is resonant with iron ore futures. Since May 26, iron ore futures prices have continued to rise sharply, with a cumulative increase of more than 13%, which has formed a significant boost to the value of the Australian dollar. Since June 1, AUDUSD has achieved four consecutive suns, which is not unrelated to the strong rise of iron ore. From a technical point of view, the short-term support of the Australian dollar exchange rate is at the 0.6600 position. After breaking the support on May 24, it returned to the support price on June 2, forming a false breakthrough. The market price is within the shock range formed by the support and resistance levels, and the probability of the market outlook is still operating according to the shock mode (daily level). From July 2011 to February 2020, the Australian dollar exchange rate has been in a short trend for 9 years. In March 2020, it fell to the lowest level of 0.5509, which is the bottom area in decades. From the perspective of cycle turnover, the Australian dollar exchange rate may have started a long-term upward trend. The falling band (monthly level) from February 2021 to the present, the lowest point reached 0.618 points, and the probability of the market ending and rising is high.

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