Recently, the US dollar index has exceeded expectations and has risen to 103 points. According to common sense, the US dollar index should fall after the interest rate cut, but the actual result is that after the Fed cut interest rates, the US dollar index rebounded and continued to break through the integer mark of 103 points.
First of all, the United States is a country that is very good at managing expectations. From a policy perspective, the Federal Reserve will officially cut interest rates from the beginning of 2024 until the end of September. In fact, the voice of the Federal Reserve's interest rate cut began at the end of 2023. Before the official interest rate cut at the end of September, the depreciation of the US dollar was actually very obvious. When the real shoe drops, the real depreciation of the US dollar will hardly continue.
At the same time, there is another thing that deserves everyone's attention. The Fed's interest rate cut is very different from the past. The difference is that this time the US dollar interest rate cut cannot be equated with the US loosening the monetary policy, and the Fed actually started to change from QE policy to QT policy a long time ago. (The QE policy is actually the continuous purchase of Treasury bonds by the Federal Reserve to release liquidity from the market. And the scale of bond purchases should be a process of continuous increase and expansion, which is called loosening the monetary policy.)
The Fed's interest rate cut has led to a continued rise in asset prices, which is good for asset prices. After the Fed's interest rate cut, the yield of US Treasury bonds has risen instead of falling, especially the yield of the US 10-year Treasury bond has reached the 4% mark. The rise in the yield of US Treasury bonds must prove that someone is selling US Treasury bonds and recovering US dollars. The price of US Treasury bonds and interest rates are inversely correlated, which has led to the appreciation of the US dollar. There is another key reason. It is a critical period for the US presidential election. Therefore, maintaining a stable exchange rate and stabilizing economic expectations before the US election is also a very critical factor.
Since the beginning of September, important US officials, such as Federal Reserve Chairman Powell and US Treasury Secretary Yellen, have publicly stated in many speeches that there is no problem with the US job market and the operation of the US economy. Since September, US economic data has also begun to show a clear turn. One of the key factors is that the US employment data has changed from being continuously revised downward to being revised upward. Judging from the performance of the US non-farm employment data in September, the upward revision has been raised from the expected 140,000 to 250,000, an increase of more than 60%.
Such a strong performance of employment data has greatly reduced the expectation of the Fed to continue to cut interest rates in the future. At the same time, whether the United States will end the interest rate cut ahead of schedule, along with the steady improvement of US economic data, the strengthening of the fundamentals of the US dollar will naturally have a certain impact on the appreciation of the US dollar.
As the year draws to a close, the US will gradually enter a peak holiday season and a restocking cycle in the US energy sector. During this period, the dollar must appreciate to reduce import costs and prevent US inflation from going too high, that is, to lower import costs and lower domestic consumer prices.
The strength of the US economy indicates that the future trend is still upward, and it is still upward when magnified to the annual level. The Fed sells off US bonds and recovers US dollars, which reduces the liquidity of the market and prevents the bitcoin price from continuing to rise. At the same time, the probability of the Fed cutting interest rates is reduced, the probability of negative news is high, the appreciation of the US dollar, and the increase in the price of USDT are all impacts on the cryptocurrency circle.
