The US dollar rebounds strongly. The US dollar's trend this month has been like a roller coaster.

In the first 21 days, as the global economy improved significantly and risk appetite continued to rise, the U.S. dollar index fell from a stage high of 77.48 on October 2 to a year-long low of 74.94, a drop of nearly 3% during the period.

On the 22nd, the decline of the U.S. dollar index narrowed to 0.05%.

Subsequently, boosted by safe-haven buying, a retaliatory rebound began, and the daily K-line achieved "four consecutive positives".

In just 7 days from the 22nd to the 28th, the U.S. dollar index rose by as much as 1.82%.

The dollar's strong rebound has dealt a heavy blow to global risk asset prices.

After reaching a new high of 10,119.17 points for the year, the Dow suffered a reversal and fell below the 9,800-point mark.

A shares were also dragged down by the rise of the US dollar, falling 3.6% from the 22nd to the 29th.

The commodity market also fell sharply, with international gold prices falling by nearly 3%, and the settlement price of light, sweet crude oil for December delivery plummeting by 4.8%.

The root cause is carry trade?

Why is the dollar rebounding so hard?

First of all, from the perspective of economic data, the U.S. economic data this week is not ideal, which provides support for the rebound of the US dollar.

The October consumer confidence index released by the United States on Tuesday fell sharply to 47.7.

U.S. new home sales fell for the first time in six months in September.

In addition, from the perspective of the credit market, as of Thursday, the DJ Credit Default Swaps (CREDITDEFAULTSWAPS) index surged 7.35% to 109.103, indicating that market risk aversion has rebounded.

Xie Guozhong, a well-known independent economist, said yesterday that because the previous decline was too fast, the current rebound of the US dollar is technical.

Some hedge funds trade based on technical indicators such as volume and amplitude. Since the market has been too optimistic about economic expectations, once the data is lower than expected, these hedge funds will close their positions in carry trades and choose to cash out.

Great Wall Securities strategist Labo also pointed out yesterday that the fundamental reason behind the dollar's rebound is carry trade.

Data show that the U.S. dollar's three-month London interbank offered rate has continued to decline recently.

In this case, carry traders are borrowing extremely cheap dollars and converting them into high-interest currencies.

However, once there is a slight change in the economic data, risk aversion will push up the U.S. dollar, and the high-interest currencies held by carry traders will depreciate. In order to avoid further depreciation, the carry trade has to be closed, which is equivalent to buying back the U.S. dollar.

, further pushing up the dollar exchange rate.

The Australian dollar currently has the highest interest rate among the eight major currencies, followed by the New Zealand dollar.

During the U.S. dollar’s ??rebound from the 22nd to the 28th, the average daily absolute values ??of the New Zealand dollar’s ??rise and fall against the U.S. dollar and the Australian dollar against the U.S. dollar were 0.76% and 1.06% respectively, while the euro and pound against the U.S. dollar during the same period were only 0.46% and 0.56%.

The active level of arbitrage unwinding of high-interest-bearing currencies can be seen.

The U.S. dollar may continue to strengthen in the short term. Thursday's data showed that U.S. GDP rose 3.5% in the third quarter, the first positive growth in nearly a year and better than expected.

Suppressed by this, the U.S. dollar index plunged 0.6% to 75.9 on Thursday.

Where will the U.S. dollar go in the future?

What impact will it have on A shares?

Xie Guozhong believes that the US dollar will maintain its rebound momentum in the next three weeks.

At present, the fundamentals of the U.S. economy are much better than in the past, driven by factors such as the reduction in foreign trade deficit, and market sentiment often lags behind. It is expected that the U.S. dollar index will find it difficult to fall below 71.

It is worth noting that the Federal Reserve is more likely to raise interest rates in the next 12 months, and interest rate hike expectations are often brought forward. In this case, hedge funds may exit carry trades due to the use of excessive leverage.

As for the impact on A-shares, Xie Guozhong said that although there is a certain linkage between the US dollar and A-shares, it is still the monetary issue that determines the direction of A-shares.

It is expected that the A-share market is unlikely to fall sharply in the future, but it will not go far upward.

If the government introduces credit adjustments in real estate in the future, it will pose a major risk to A shares.

Labo pointed out that in the medium and long term, the depreciation of the US dollar is not over. To judge whether it will bottom out, we often have to wait until expectations of an interest rate hike emerge. It is expected that the Federal Reserve will likely raise interest rates in the middle of next year, and interest rate hike expectations will be brought forward to the first two days.

quarter.

The dollar will fall below the year's low of 74.9.

Labo said that domestic economic data ushered in a vacuum period in October, and A-shares turned to look at the external market and amplified this.

A weaker US dollar will support A shares in the future.