Fed's hawkish stance escalates, markets bet on stronger dollar

Due to the fact that the Fed has become more and more in place in terms of communication in recent years and even "close to the people" - for example, a press conference is now held after each meeting. Some media, which used to be regarded as the "mouthpiece" of the Fed, have become more important in the past few years. declining day by day. However, this time, when the burst of U.S. inflation coincides with the period of the Fed's silence, and the Fed is in a situation where "dumbs can't tell the hardships", many people in the industry are turning their focus back to the media that used to be closely related to the Fed. body.

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Long dollar positions, betting on a stronger greenback, were among the most crowded trades, according to the Bank of America's June survey of global fund managers. Long dollar trades were seen as the second-intensive in June, after long oil/commodities, the survey showed. The survey also showed that 59% of investors believe the dollar is overvalued, up 12 percentage points from the May survey and the highest level since June 2019. The U.S. dollar index DXY was flat at 105.14 after hitting a 19-1/2-year high of 105.29 overnight.

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The U.S. NFIB Small Business Confidence Index fell in May as inflation concerns persisted. Details of the report showed labor demand remained strong despite rising interest rates and tighter financial conditions. However, the proportion of business owners expecting better business conditions over the next six months fell again (each month since January) to a record low.

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The international gold price rebounded and turned higher after refreshing the low since May 18 to $1809.16 per ounce, and the pause of the dollar's upward movement eased the selling pressure in the gold market. But gold's gains were capped by mounting bets on the Fed to aggressively tighten monetary policy. It is almost certain that the Fed's hawkish stance will only be more hawkish than it was in March.

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Scottish First Minister Sturgeon said she would push through any legal means possible to vote on Scottish independence. Sturgeon's SNP government on Tuesday released the first in a series of documents that will collectively form "an instruction manual for how an independent Scotland works". The government will study the economy, currency, and prospects compared to other small European countries. When the SNP won the general election in May last year, Sturgeon promised to resume his campaign to create Europe's youngest country after the pandemic. But Sturgeon's dilemma is that British Prime Minister Jensen refuses to allow Scotland to hold another referendum on leaving the United Kingdom. The last referendum, which took place in 2014, was 55% to 45% in favour of staying in the UK.

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OPEC sources said that global crude oil demand is expected to grow by no more than 2 million barrels per day in 2023, an increase of only 2%, while in 2022 it is expected to grow by 3.36 million barrels per day. "Even if it's only 1 million bpd, that's still a growth, not a peak," the representative said of the outlook for next year. OPEC is expected to publish its first demand forecast for 2023 in its July monthly report. OPEC is watching for signs that high fuel prices are driving down oil demand. The demand destruction could have an impact on oil use in the coming months, though, as far as gasoline is concerned, there is no sign of that in the U.S. yet. Oil at $120 a barrel is destroying demand, and that's already happening.

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Since the Russian-Ukrainian conflict, the West has continued to increase sanctions against Russia, prompting many oil importers to avoid trading with Russia, resulting in a record discount for the spot price of Russian crude oil relative to other grades of crude oil. India took this opportunity to "picked up leaks" in a big way. Despite pressure from European and American countries, India has been increasing its purchases of Russian crude oil recently. Russia jumped to become India's second-biggest oil supplier in May, pushing Saudi Arabia to third place, with Iraq remaining the top supplier, data provided by trade sources showed.

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Japanese Finance Minister Shunichi Suzuki on Tuesday reiterated his concerns about the recent rapid weakening of the yen, saying the government would coordinate any appropriate response with the Bank of Japan. The yen has slipped to a 24-year low against the dollar in recent days. It is important that exchange rate movements are stable and reflect economic fundamentals, and excessive volatility and disorderly movements can damage economic and financial stability. Japan will maintain close communication with other G7 foreign exchange authorities in accordance with the Group of Seven (G7) exchange rate agreement. Currency market movements and their impact on the economy and prices will be closely watched with more urgency. The Japanese government and central bank issued a rare joint statement on Friday expressing concerns about a sharp decline in the yen. Some investors worry that the Bank of Japan may intervene in currency markets or abandon its commitment to stick to its bond yield target.