FX168 Financial News (Hong Kong) - Global stock markets fell today, in addition to a series of factors such as Sino US trade frictions, Brexit negotiations, and Italian budget concerns, all of which hit investor confidence.
Due to the general nervousness of investors, the safe haven yen rose to 112.30 against the US dollar, and funds poured into the US dollar, USD Index It rebounded today, reaching 96.37 at the highest level, breaking away from the two-week low
The index fell nearly 0.5% last week, the largest weekly decline since the end of September, because investors were worried about the slowdown of the US economic growth and the recent remarks of senior officials of the Federal Reserve!
The next night, William Williams, the third person of the Federal Reserve and the chairman of the New York Federal Reserve, said, "We may raise interest rates, but it is really necessary in the context of a very strong economy."
Richard Clarida, Vice Chairman of the Federal Reserve, and Robert Steven Kaplan, Chairman of the Dallas Federal Reserve, said last week that they were worried about the possible slowdown of the global economy.
This factor has led the market to bet heavily on the end of the interest rate rise cycle, even if senior officials of the Federal Reserve hinted that more interest rate rises would be carried out. The remarks made by the officials of the Federal Reserve prompted some traders to question whether the rise of the dollar was near the end
However, some analysts believe the dollar will make a comeback. Ray Attrill, head of foreign exchange strategy at National Australia Bank (NAB), said Williams' comments were reasonable, but not as dovish as those made by Clarida and Kaplan last week.
Attrill also pointed out that the market may reflect on whether the comments made on last Friday are too dovey, which may lead to the reversal of the weak trend of the US dollar.
about euro : At a time when the relationship between the EU and Italy is strained due to the budget, with the decline of European stock markets, Italian bank shares fell to a two-year low, Italian government bonds suffered another sell-off, and the euro gave up its gains.
"It was mainly driven by the atmosphere. The European market opened weaker and the Italian risk was still there, which did not help the euro," said Alvin Tan, an analyst at Societe Generale.
Italian government bond yields hit a one month high on Tuesday on signs of escalating tensions between the government and the EU over its 2019 budget.
Luigi Di Maio, Italian Deputy Prime Minister, said on Tuesday that Italy's budget could find a solution to the deadlock with the EU, but the main measures contained in the budget must not be moved.
The weakness of bank stocks and the overall European stock market also aggravated the selling of high-risk Italian government bonds.
Italian government bond yields rose as high as 13 basis points, five-year bond yields rose to 2.97%, and 10-year bond yields rose to 3.70%. This pushed the spread of Italian 10-year bonds over Germany to 333 basis points, the widest in a month, and 322 basis points late Monday.
Checked by: becky
