The eagle waves of the Federal Reserve stimulated the strong rise of the dollar, but DBS Bank believes that the pattern of strong dollar appreciation will continue until the end of this year (2022). ; As for the yen, it is expected to hit 150 in the fourth quarter.
Chen Yujia, Vice President of Wealth Management Investment Advisory Department of DBS Bank (Taiwan), said that the Fed is expected to continue raising interest rates, driving the federal funds rate to 5% in the first quarter of next year (2023). Rising interest rates will also drive the dollar to continue to appreciate.
Chen Yujia predicts that the US dollar index will climb to 115 in the fourth quarter, and will continue to fluctuate in a range of 113 by the end of this year. The strong US dollar pattern will remain until the end of this year, but next year, with the Federal Reserve meeting to raise interest rates, it will slow down. , it is expected that the dollar index will fall, and it is expected to drop to 112.8 in the first quarter of next year and to 110.6 in the second quarter.
Compared with the monetary tightening by the Federal Reserve and other central banks, the Bank of Japan implemented quantitative easing, which in turn suppressed the trend of the yen. At present, the yen against the US dollar has reached 149 yuan. Chen Yujia believes that the yen against the US dollar is likely to rise in the fourth quarter. Depreciated to 150, came to the price range of ultra-depreciation.
Chen Yujia pointed out that the U.S. Federal Reserve has raised interest rates five times since March, with a combined rate of 300 basis points. U.S. Treasury yields have risen more than 3 times, and U.S. stocks have also fallen by nearly 25%. DBS Group estimates that the Federal Reserve may raise the federal funds rate to 4.5% this year, and then assess whether the impact of the hike on the overall labor market and inflation has achieved the expected effect.
Looking ahead, Chen Yujia believes that the world will continue to struggle with geopolitical uncertainty and high inflation. Although the Fed’s hawkish remarks have not yet reached a high point, the lagging economic data also show that inflation levels are still at a high level. Reopening, supply chain bottlenecks caused by the epidemic have eased, and global commodity prices have fallen significantly on fears of a weakening economy.
