On Thursday (November 14), during the Asian session, the US dollar index slightly increased, reaching a one-year high of 106.62 with a rise of approximately 0.1%. Driven by market expectations of future policies, the dollar rose against major currencies for the fourth consecutive day. Previously, US October inflation data met expectations, but the inflation rate remained above target levels, suggesting that the Federal Reserve may slow the pace of rate cuts.
Analysts anticipate that under new policy initiatives, additional tariffs and tighter immigration policies may further boost inflation, thereby prolonging the Federal Reserve's rate cut cycle. Furthermore, expectations of increased deficit spending have pushed up US Treasury yields, providing more support for the dollar.
Data released by the US Department of Labor on Wednesday showed that the Consumer Price Index (CPI) increased by 0.2% month-on-month in October, marking the fourth consecutive monthly rise, in line with market expectations, mainly due to rising costs such as rent. The CPI in October rose by 2.6% year-on-year.
Market analysts believe that although the data met expectations, it acts as "a new brick in the wall of worry," heightening market apprehension over inflation and future policies. The dollar has become the most direct tool to address upcoming economic policies.
Technically, the dollar index shows that the 5, 10, and 21-day moving averages continue to rise, with the Bollinger Bands widening, indicating a bullish trend. The dollar index has surpassed the 2024 high of 106.51, with a future target possibly at the 2023 high of 107.34. Short-term support levels are at 105.71 and 105.43.
Meanwhile, the Australian dollar weakened against the US dollar, reaching a new low since August 6 at 0.6476, due to below-expected October employment data in Australia. The data showed that the employment population increased by only 15,900 in October, significantly below September's 61,300 and the market's expectation of 25,000, marking the smallest increase in seven months. However, the annual employment growth rate remains at 2.7%, and the unemployment rate is steady at 4.1%. The labor force participation rate slightly decreased to 67.1%.
With the impact of anticipated future policies, the strong dollar trend persists; while the Australian dollar is under pressure due to weak employment data.
