The decline has not yet arrived, and the dollar has taken off

The 21st Century Business Herald reporter Chen Zhi Shanghai reported that with the increase in the risk of economic recession in Europe and the United States, the US dollar is becoming the biggest "beneficiary".

As of 19:00 on July 6, the US dollar index hovered around 106.77, and the highest value in the past 20 years was 106.84.

"Behind this is that the risk of economic recession in Europe and the United States is concerned about heating up, causing many investment institutions to surge in the US dollar." A Wall Street hedging fund manager pointed out to reporters that the global reserve currency status and high liquidity of the US dollar have become these investment institutions. The first choice of cash is the "king" strategy.

The reporter learned that the US dollar is so "strong" and can also be attributed to the "god assisted" of the weak euro.

As of 19:00 on July 6, the exchange rate of the euro against the US dollar hit near 1.022, and the lowest value of the lowest value of 1.021 in the past 20 years was touched.

"To some extent, the disadvantaged euro has created a strong dollar." A foreign exchange trader of a private equity fund in the Asia -Pacific region bluntly said to reporters. Affected by Russia or will continue to reduce the supply of natural gas in Europe. In the past two days, the financial markets are discussing that Europe may encounter energy shortage in the second half of the year, triggering many speculative capital to sell short -selling euro. Due to the high proportion of the euro index in the US dollar, the euro's plunge invisibly promoted the "passive" appreciation of the US dollar.

The above -mentioned Wall Street Hedie Fund Manager said that a strong US dollar also triggered a series of Domino effects. On the evening of July 5th, NYMEX crude oil futures fell by about 8%, which once fell below the $ 100/barrel integer mark. Other commodities such as Copper London continued to fall sharply below the new lows during the year.

"Today, under the resonance of strong US dollar and economic recession risk (leading to a sudden demand), the commodity futures market is flowing more than 10 billion US dollars every week, and no one will mention inflation transactions." He said.

However, how long the strong dollar will last, there is huge differences in Wall Street.

A director of the asset allocation department of a large Wall Street asset management institution revealed to reporters that the current US dollar index is hit for a new high, and another important factor is that the Fed continues to increase its interest rates sharply, which has led to the continuous expansion of the spread advantage of the US dollar. However, more and more Wall Street investment institutions have noticed that with the increase in the risk of US economic recession and the decline in commodity prices, whether the Fed has continued to raise a significant interest rate hike of 75 basis points, still facing increasingly large and more variables.

"At present, the US dollar index has been fully included in the Federal Reserve's expectations of 75 basis points in July. Once the Fed releases pigeons, it may lead to a strong US dollar pattern instantly reversed." He admitted. In addition, the foreign exchange market has a strong operating characteristics of "buying expectations and selling facts" -even though the Federal Reserve raised 75 basis points in July, it cannot exclude the US dollar encounters a profit.

Strong US dollar exploring

"Except for buying up the dollar, we now seem to be able to find other more better -made investment varieties." The manager of the Wall Street Hedge Fund revealed to reporters. On the evening of July 5th, he found that many hedge funds were doing the same thing -selling all risk assets and turning to buy up the US dollar to avoid risks.

In his opinion, an important catalyst that led to the influx of risky funds into the US dollar was that the yield of US bonds in 2/10 that night had once again inverted, further exacerbating the market's panic in the US economy decline.

In fact, there is a complementary relationship between the inverted and powerful dollar of US debt yields in 2/10. Specifically, due to many Wall Street investment institutions bought long -term US debt assets, the 10 -year US bond yield rate is rapidly lower than the 2 -year US debt yield, and more capital is based on the needs of risk aversion. Long-term U.S. debt has continued to expand and continues to rise in the invertedness of the 2/10-year US debt yields and the US dollar index continuously increased, thereby creating a short-term US debt yield reversal-market panic emotion continues to heat up-more capital buy long-term US debt The hedging-the US dollar index is constantly pushing the cycle.

Several overseas investment institutions also believe that there is another behind -the -scenes pusher that drives the US dollar index in a new high, that is, the euro is weak. Russia continued to reduce the supply of natural gas losses in Europe, Europe may encounter energy shortage of energy, and the European stock market suffered a sharp decline in the evening of July 5. The German French stock index reached a new low during the year, which led to many European investment institutions selling risk assets such as European stocks and transferring energy to energy sources. Supply of relatively stable US dollar assets assets, but this move invisible to the euro exchange rate against the US dollar below the lowest value in the past 20 years, helping the US dollar index innovation.

"In addition, many speculative capital also took the opportunity to take short -selling euro arbitrage, which further expanded the US dollar increase." The aforementioned foreign exchange trader in the Asia -Pacific region said.

The reporter noticed that although the European stock market began to bottom out on July 6, the US dollar index was still hitting a new high, indicating that a large amount of risk aversion capital was still pouring into the US dollar.

"In the short term, market risk aversion will affect whether the US dollar index can continue to reach a new high. In the middle and long term, the US dollar index trend mainly depends on three points. One is whether Europe can successfully get rid of energy shortage storms. Whether the risk of decline can be reduced, the third is whether the interest rate hikes of the Federal Reserve continue to surpass other countries. "The above foreign exchange traders emphasized.

Bringing other risk shelter

The strong dollar also makes other traditional risk aversion varieties "boring".

As of 19:00 on July 6, the main contract price of COMEX gold futures hovered at $ 1759.8/ounce, and the minimum value of $ 1758.9/ounce has been set since 2022.

Data Data show that this means that compared with the historical high of 2003 US dollars per ounce in the historical high in the COMEX Gold Futures Disk in mid -April, gold futures have fallen by about 13%in the past 3 months. "Behind the sudden fall of gold, many investment institutions choose US dollars as the first choice of insurance investment, not gold." A US securities broker revealed to reporters. In addition, the US dollar continues to innovate, which has also led to a sharp decline in the gold price pricing at the dollar, which has caused gold to lose the "hedging effect".

In his opinion, it reflects the risk aversion attitude of many investment institutions -they value the liquidity of risk -free assets. In this case, the dollar seems to be more advantageous than gold.

"In addition, in the face of future economic recession uncertainty and the impact of the upgrading of the Russian -Ukraine conflict, more and more investment institutions have selected cash as a king strategy, so the US dollar is more popular than gold." The US securities broker emphasized.

The reporter learned that although the Gold ETF has high liquidity, under many investment institutions in Wall Street, it has increasingly pursued the "cash as king" strategy, and it inevitably encountered large -scale capital redemption, dragging down the price of gold further.

Not only gold, but also the hedging currency such as the yen Swiss francs also suffered "cold encounters".

Since June, due to Japan's continuous loose monetary policy, the yen's exchange rate against the US dollar has fallen to the lowest value in the past 24 years, which has made it "disappeared" for the hedging currency attributes. Today, many investment institutions are more willing to regard the yen as "risk assets", and the exchange rate of the yen against the US dollar may fall below 150.

On the other side, although the Swiss Central Bank accidentally raised interest rates and intervene in the foreign exchange market, Swiss francs still touched the lowest point in the past two weeks in the past two weeks in front of a strong US dollar, indicating that the market favors the risk aversion attributes of the US dollar.

"Now, Wall Street has begun to pursue a new investment criterion -buying US dollars in troubled times. But no one knows how long this new investment standard will last." The aforementioned Wall Street hedge fund manager pointed out to reporters. However, an indisputable fact is that as long as the global financial market has once again experienced a fierce fluctuations, more and more investment institutions will "instinctively" buy the US dollar to avoid risk.

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