The Dollar's Exchange Rate Is Again Hot And Canada's Economic Downturn Is Pushing Ahead.

Before the Federal Reserve releases its minutes of last month's meeting on Wednesday (January 8th), the Fed officials also appeared again to affirm the prospect of reducing quantitative easing measures, which also kept the US dollar index strong. In December, when the non farm payrolls data were released on Friday (January 10th), investor sentiment was also optimistic again, making the US dollar, the US debt and the US stocks rising together.

　　 Canada's economic outlook is not optimistic. Funds are coming down to the US market to avoid risks.

　　 dollar The index rose rapidly after entering the New York session on Tuesday, with the main driving force coming from Canada, a close neighbor of the United States. Data from that day showed that the Ivey PMI value of Canada after the December quarter was only 46.3, which was deep below 50, and far below the previous estimates of 54.5 and November's 53.7.

Earlier, Canada's November trade accounts were also much less than expected. The data clearly revealed the overall economic downturn in Canada, and forced the government and central bank to take more relaxed economic stimulus measures, including further intervention to curb the Canadian dollar exchange rate.

Last week, Poloz, the governor of the central bank, pointed out that the need to further lower the Canadian dollar exchange rate to boost the country's buoy manufacturing industry, and the current economic data also confirmed its reasonableness. Therefore, there is room for further growth in the US dollar against the Canadian dollar.

On the same day, he also said that the central bank should maintain its key interest rate unchanged until the future announcement of the economic data forced the Central Bank of Canada to change its mind. Its statement is contrary to the statement made by Canadian Finance Minister Jim Flaherty on Sunday (January 5th). Fehaiti hinted at that time that the situation could force the Bank of Canada to raise interest rates as early as 2014.

Canada Central Bank The expectation of maintaining the same easing and the prospect of gradual easing of quantitative easing by the Fed will further squeeze the policy premium space of the Canadian dollar against the US dollar, forcing more market funds to flow from Canada to the US market. For some time, Canada's economic fundamentals were better than that of the US, and the Central Bank of Canada tightened its expectations, making the US dollar exchange rate once below the parity price. But this situation has been reversed since last year, and the Bank of Canada finally gave up its austerity expectations.

In the light of the above situation, the US dollar Canadian dollar exchange rate has risen sharply in the days to 1.0780. Canada's poor economic data, in addition to boosting the US dollar, also triggered a new wave of capital position adjustment in the global market, which also brought down the exchange rate of the pound and the Swiss franc.

　　 Fed officials continue to press for QE cuts, and the US dollar continues or boosts.

Another big factor in the increase in the price of money pushed by the US dollar is fed officials' speech. Last Friday (January 3rd), three Federal Reserve officials including Ben S. Bernanke, who left the office immediately, defended the decision to start reducing the scale of quantitative easing measures (QE) at last month's meeting, saying that it is the general trend to make this decision in the context of the good economic fundamentals of the United States. Bernanke, On Tuesday, two other officials of the Federal Reserve issued similar views.

Rosengren, chairman of the Boston Federal Reserve, said on Tuesday that if the Federal Open Market Committee (FOMC) reduced the policy of quantitative easing (QE) by about $10 billion at every monetary policy conference in the future, he thought it would be an appropriate move for the Federal Open Market Committee (Eric) to reduce its policy of about $10 billion. This shows that his views have changed. Rosengren was the only FOMC member to vote against the action taken in December when the Federal Reserve announced the beginning of the debt reduction plan at the end of the interest rate meeting ended in December 18th.

Rosengren pointed out that if unemployment rises and employment market Stopping the signs of improvement will be the reason for the suspension of debt reduction, but if the economic growth is strong and the inflation rate jumps unexpectedly, it will make the policy of speeding up the reduction of QE reasonable. He also believes that lowering the threshold of unemployment rate on the issue of raising interest rates will be satisfactory, saying that the communication is complicated.

Since then, another Federal Reserve official, Williams, chairman of the San Francisco fed, has also indicated that if the US economic recovery is strengthened as expected, the Federal Reserve will gradually terminate the QE policy in 2014, but it is still too early to consider raising interest rates.

Williams pointed out that the Fed will gradually reduce its massive bond buying program in the next few months on the premise that the US economy continues to improve. He said that only when the future economic data deviate from current expectations will the Fed adjust its policy. It is expected that in the next several meetings, the Federal Reserve will gradually reduce the intensity of debt purchase at a prudent pace.

The above situation has further boosted the optimism of investors against the US dollar index. However, the US dollar increase is still limited, because the Federal Reserve will release the minutes of the 17-18 meeting of December on Wednesday (January 8th). In view of the previous meeting of the Fed meeting minutes, the wording of the minutes of the Fed meeting is different from that of the corresponding meeting resolutions. That is to say, the more tough resolutions will be accompanied by a more relaxed summary. Anyway, after the decision of the Federal Reserve last month cut down QE, the meeting minutes may release the doves' words to stabilize the market sentiment, which makes the market investors more or less cautious.