Behind the dollar's surge is a reflection of the undercurrents in the capital market. When the scene of 'selling everything' reappears, we need to confront the question: is this world really in danger?
The US Dollar Index has risen for five consecutive trading days, approaching extreme levels for this year. A-shares have fallen, the RMB has depreciated, and gold, silver, and Bitcoin have turned downward; at least half of the decline in global markets is influenced by the rise of the dollar.
1. The strong trading of the dollar is like a cork in water... you push it down, but it will bounce back up directly. If its closing price in the next few trading days is above the 107 level, we will once again witness the scene of 'selling everything'. The surges of the dollar in 2013, 2018, and 2022 have all triggered panic in global markets. The rise of the dollar is not just a currency phenomenon; it is a key factor affecting global asset pricing, capital flows, and investor sentiment. When the dollar rises, it is often accompanied by market panic of 'selling everything', putting immense pressure on the world economy.
2. Fortunately, the dollar index paused its rise on Friday, providing investors with a slight breather. If the US stock market rises tonight, global markets may not experience panic. However, if US stocks continue to decline, it could trigger a 'domino effect', further pressuring global assets.
3. Next week, the Federal Reserve will announce the December interest rate decision. Investors' absorption of a 25 basis point rate cut at this meeting has reached as high as 98%, which means a significant factor that could cause the dollar to turn downward may disappear. In other words, this meeting is unlikely to exert significant pressure on the dollar, and may instead become a catalyst for its rebound. In particular, some viewpoints suggest that the Federal Reserve may hint that this will be the last rate cut of this cycle, further supporting the rise of the dollar.
Global market sentiment is already on high alert. The '25 basis point rate cut in December' has become the least important piece of news; any change in a word in the Federal Reserve's policy statement next week, or a statement from Chairman Powell, could trigger huge waves.
