The US dollar index hits an eight week high, and non US currencies are generally under pressure

On October 10, 2024, in the global foreign exchange market, the US dollar index once again demonstrated its strong stance, rising 0.43% to 102.90, reaching its highest level in nearly eight weeks. This trend not only demonstrates the stable position of the US dollar in the global monetary system, but also reflects the relatively optimistic attitude of the current international financial market towards the prospects of the US economy. At the same time, non US currencies are generally under pressure, with major currencies such as the euro, pound, and Australian dollar experiencing varying degrees of decline against the US dollar.

The rise of the US dollar index is not accidental, but the result of multiple factors working together. Firstly, the strong performance of US economic data has always been an important driving force supporting the rise of the US dollar. Recently, key economic indicators such as labor market data, inflation data, and retail sales data in the United States have all performed well, indicating that the US economy is gradually recovering from a period of slowdown and regaining growth momentum. These data not only enhance market confidence in the US economy, but also increase investors' attractiveness to US dollar assets.

Secondly, the Federal Reserve's monetary policy adjustments have also had a significant impact on the trend of the US dollar. Although the Federal Reserve has cut interest rates multiple times in recent times, the market generally believes that these rate cuts are mainly aimed at addressing the uncertainty brought by the global economic slowdown and trade tensions, rather than problems with the US economy itself. Therefore, while cutting interest rates, the Federal Reserve still maintains a relatively tight monetary policy stance, which helps maintain the stability of the US dollar exchange rate. In addition, geopolitical risks are also one of the important factors affecting the trend of the US dollar. Recently, tensions in the Middle East have escalated again, causing concerns in the global market. In this situation, investors are more inclined to invest their funds in relatively safe US dollar assets, thereby driving up the US dollar index.

Compared to the strong performance of the US dollar, non US currencies appear relatively weak. Major currencies such as the euro, pound, and Australian dollar have all experienced varying degrees of decline against the US dollar.

The euro fell 0.37% against the US dollar, which, although not significant, reflects the market's concerns about the eurozone economy. Recently, the economic data of the Eurozone has performed poorly, especially the PMI data of manufacturing and service industries have both declined, indicating that the growth momentum of the Eurozone economy is insufficient. In addition, political risks within the eurozone have also had a negative impact on the euro exchange rate. Under the combined effect of these factors, the exchange rate of the euro against the US dollar is under pressure. The pound also fell 0.29% against the US dollar. Despite a series of economic stimulus measures recently introduced by the UK in an attempt to boost economic growth, market concerns about the post Brexit economic outlook have not dissipated. In addition, the Bank of England chose to keep interest rates unchanged at its recent monetary policy meeting, which has also put pressure on the pound exchange rate. The Australian dollar fell 0.46% against the US dollar, mainly due to poor domestic economic data in Australia and the decline in commodity prices. Recently, both the manufacturing and service PMI data in Australia have declined, indicating weak domestic economic growth. Meanwhile, the decline in commodity prices has also lowered Australia's export revenue, further suppressing the exchange rate of the Australian dollar.

Among the major currencies, the US dollar against the Japanese yen and the US dollar against the Swiss franc have shown an upward trend. The US dollar rose 0.75% against the Japanese yen, a relatively large increase mainly due to poor domestic economic data and risk aversion in Japan. Recently, Japan's domestic economic data has been weak, especially with persistently low inflation data, which has raised concerns in the market about the outlook for the Bank of Japan's monetary policy. In addition, the rising risk aversion has also driven investors to invest their funds in relatively safe US dollar assets, thereby pushing up the exchange rate of the US dollar against the Japanese yen.

The US dollar also rose 0.41% against the Swiss franc. As one of the safe havens in the global economy, Switzerland's currency, the Swiss franc, usually rises when market safe haven sentiment heats up. However, in recent times, due to the increasing uncertainty in the global economic situation and the escalation of geopolitical risks, investors' demand for safe haven assets has become more urgent. In this situation, the US dollar, as a relatively safe asset, has also been favored by investors, driving up the exchange rate of the US dollar against the Swiss franc.

In summary, the rise of the US dollar index on October 10th and the general decline of non US currencies are the result of multiple factors working together. Against the backdrop of increasing global economic uncertainty and escalating geopolitical risks, investors' preference for US dollar assets continues to rise. However, we should also recognize that currency exchange rate fluctuations are a normalized phenomenon, and in the future, with changes in the global economic situation and adjustments in monetary policies of various countries, the US dollar exchange rate may also experience fluctuations. Therefore, investors should maintain a rational attitude, closely monitor the global economic situation and the dynamic changes in monetary policies of various countries, in order to formulate reasonable investment strategies.

In the future, we look forward to seeing the global financial market develop more stably, and currencies of various countries maintain relatively balanced exchange rates. At the same time, we also hope that countries can strengthen cooperation and coordination, jointly address global economic challenges, and promote the sustained and healthy development of the global economy.