At the beginning of Asian trading on Monday (June 20), the US dollar index is now at 104.66; The US dollar index rose nearly 1% last Friday; The US dollar rose by more than 2% against the yen, and the Bank of Japan insisted on its ultra loose position against the tightening trend, which aggravated the volatility of the foreign exchange market. Last week, a series of interest rate hikes impacted the foreign exchange market, resulting in a sharp rise in volatility.

Last week, many central banks raised interest rates by the largest margin in decades, including the Federal Reserve's 75 basis points increase last Wednesday, the largest since 1994, and the Swiss central bank unexpectedly decided to raise interest rates by 50 basis points. Affected by this, the foreign exchange market fluctuated sharply.

The Bank of Japan bucked the tide last Friday, keeping its policy stance unchanged, vowing to purchase treasury bonds without restrictions to defend its yield ceiling of 0.25%. Boris Schlossberg, managing director of foreign exchange strategy at BK asset management, said, "originally everyone expected the Bank of Japan to act. But they didn't. The 135 level has always been the technical resistance level of the yen. Breaking this level may push the dollar against the yen to 137 or 140. I think this will definitely force some early short positions to be closed.

The Swiss central bank's decision to unexpectedly raise interest rates by 50 basis points continued to ferment in the market, and the euro fell against the Swiss franc, hitting the level of 1.0097, the lowest level since April 13, as investors bet that the Swiss central bank would not stop the appreciation of the Swiss franc as it did in the past.

UBS global wealth management chief investment office strategist said in a research report, "Switzerland's unexpected interest rate hike and the European Central Bank's announcement that it is studying a tool to prevent the fragmentation of the European bond market will help limit the strength of the US dollar near current levels."

In addition, the centrist coalition of political parties, ensemble, led by macron, is expected to win the most seats in Sunday's general election, but the near final results show that this is far from the absolute majority required to control Parliament.

The pan left coalition is expected to become the largest opposition group, while the far right has won a record number of seats, and the Conservatives are likely to become the party that decides the situation.

Finance minister Bruno le Maire called this result a big shock to democracy "and said that if other factions do not cooperate," it will hinder our ability to reform and protect the French.

”If there is a Parliament without a majority (suspension), all parties will have to reach a certain degree of power sharing and compromise, which has not happened in France for decades. The last time a newly elected French President failed to obtain an absolute majority in parliamentary elections was in 1988.

Prime Minister Elisabeth borne said, "given the challenges we must face, this result is a risk for our country." he also said that from Monday, macron's camp will strive to seek alliances. If there is a legislative impasse later, macron may eventually announce an early election.

The left-wing newspaper Liberation Daily called the result a "slap in the face" for macron, while the economic daily echo called it "an earthquake". With the support of Mei langxiong, the left-wing party is expected to win twice as many seats as the last legislative election in 2017.

Sterling fell more than 1% to 1.2172 against the US dollar on Friday, reversing most of the gains recorded after the Bank of England decided to raise interest rates again. Although the rate hike of the Bank of England was lower than many people in the market expected, the Bank of England sent a hawkish signal that it would take further policy action in the future.

Monday outlook

At 00:452 on Tuesday, fed Brad discussed inflation and interest rates.

Institutional Perspective

British investment bank: the aggressive interest rate hikes of the Federal Reserve and the Bank of England have made the economic recession of the two countries almost certain

Joachim Klement and Susan Cruz, strategists at the British investment bank liberum capital, wrote in a report: the aggressive interest rate hikes of the Federal Reserve and the Bank of England have made the economic recession of the two countries almost certain.

However, the good news is that although the recession may come as early as the end of this year, it is likely to be a cyclical slowdown lasting for about six months, which means that although investors need to pay more and more attention to defensive stocks, the end of the recession and another bull market will come in 2023.

JPMorgan Chase: S & P 500 index will reach 3000 points

Andrew Tyler, an analyst at JPMorgan Chase, wrote in his daily market report that the S & P 500 index would reach 3000 points. This is still 18% lower than the current level. He concluded: "given the uncertainty surrounding the Federal Reserve, investors' valuation of the P / E ratio is uncertain, so the earnings season has become crucial for these situations.

”It is worth noting that just two weeks ago, Marko kolanovic, chief global market strategist and co head of global research at JPMorgan Chase, also believed that the U.S. and global economies would avoid recession. He predicted that the S & P 500 index would rebound to about 4800 points by the end of the year.

Deutsche Bank: bullish Swiss Franc

George saravelos, global head of foreign exchange research at Deutsche Bank in London, said that given the Swiss central bank's apparent commitment to safeguarding its long-term inflation credibility, we reiterate that the Swiss franc is the best hedge against global stagflation. In our view, the bullish signal of the Swiss Franc can not be clearer.

Speculative traders are stepping up their bullish bets on the dollar

According to the latest data from the Commodity Futures Trading Commission (CFTC), the net long position of non-commercial futures linked to the ice dollar index soared to the highest level in five years. Dollar bulls were encouraged by the most radical interest rate hike by the Federal Reserve in 20 years. Last week, the central bank promised that the fight to restore price stability was "unconditional"