In the case that the Fed reaffirms its inflation control target, monetary policy will be further tightened in the future, and the possibility of raising interest rates by 75 basis points at one time will not even be ruled out. The dollar index soared strongly, hitting a 20-year high. Affected by this, this week, the RMB continued the depreciation trend of the previous week, and the exchange rate fell for the fifth consecutive week. The RMB once fell below the 6.8000 mark against the US dollar, hitting an intraday low of 6.8363 in September 2020. At present, the RMB exchange rate has rebounded slightly, trading at 6.7960. The analysis team of HYCM Industrial Investment (UK) said, "At present, the global economy is shrouded in the dark cloud of inflation, and the currencies of emerging market countries are brewing a depreciation trend. The main inducement is that the United States, the world's largest economy, has entered a period of sharp interest rate increase, and the epidemic prevention measures in China have affected the production capacity and demand to a certain extent, resulting in a dusty economic prospect for developing countries. The strength of the US dollar further sets off the weakness of the currencies of emerging market countries including the RMB. " Federal Reserve Chairman Powell said on Thursday that he thought it appropriate to raise interest rates by 50 basis points at the next two meetings. When asked whether to consider raising interest rates by 75 basis points, he pointed out that the Fed has a series of expectations for the economy, and if the data is worse than expected, it can take more actions. At the same time, Cleveland Fed President Mester said that the option of raising interest rates by 75 basis points will not be ruled out forever. If inflation does not ease in the second half of the year, we have to act quickly. She warned that the US economy may experience negative quarterly growth again, and the unemployment rate may rise. It is estimated that inflation will not fall back to 2% by the end of 2022 or 2023. In addition, Federal Reserve Governor Waller bluntly said that the inflation rate in the United States is too high, and now it is time to raise interest rates to fight inflation because the economy can bear it. New york Fed President william williams also said that raising interest rates is expected to help ease inflation without pushing up the unemployment rate. According to the inflation data released by the United States this week, the annual rate of consumer price index (CPI) increased by 8.3% in April, exceeding market expectations. In addition, the core CPI excluding energy and food increased by 6.2% annually, which was also higher than expected. In terms of employment, as of the week of May 7, the number of initial jobless claims was about 203,000, which was higher than the expected 6,543,800+092,000. The analysis team of HYCM Industrial Investment (UK) said, "The US inflation data in April did not ease much. The conflict between Russia and Ukraine continued and the epidemic continued, further disrupting the global supply chain and pushing up commodity prices. It is difficult to gain short-term inflation momentum. These will only make it more difficult for the Fed to curb inflation without plunging the economy into recession. " The team added, "From the speeches of Powell and other officials, we can know that the Fed does not rule out the possibility of raising interest rates by 75 basis points in the future, and the decisive factor for implementing this option will be the inflation situation in the next 1-2 months. If inflation continues to rise or even get out of control before the interest rate meeting in June and July, it is reasonable to raise interest rates by 75 basis points. " On the dollar side, it is clear that the strong trend of the dollar will continue to be supported by interest rate hike expectations and safe-haven demand. It is certain to continue to raise interest rates in the future. This week, the US stock market continued to sell, attracting more safe-haven funds to flow into the US dollar, helping the US dollar index to regain the 104 mark and set a new 20-year high. Last week, the Federal Reserve announced a 50 basis point rate hike, the highest rate hike in 22 years. With the tightening of the Federal Reserve's monetary policy, the cumulative appreciation of the US dollar this year is close to 65,438+00%. It is worth noting that the two safe-haven currencies, the US dollar and the Swiss franc, achieved parity for the first time in more than two years. HYCM's industrial investment analysis team said, "In the current environment, many factors have formed favorable support for the US dollar, and the trend of the US dollar has not peaked. It is expected that the upward trend of the US dollar will continue into the third quarter of this year. If risky assets such as US stocks set off a wave of selling, the US dollar index will soon break through the 105 mark, and even the level of June 2002 106.38 will not be ruled out in the next two weeks. " Next week, we will continue to pay attention to the important speeches made by several Fed officials on the economic and inflation prospects, including new york Fed President Williams, St. Louis Fed President Brad, Philadelphia Fed President Huck, Cleveland Fed President Meister and Chicago Fed President Evans. In addition, we pay attention to the economic data such as the added value of industrial enterprises above designated size in China from June 5438 to April, and the retail sales in the United States in April. In terms of RMB, in the second quarter of this year, the market fluctuated abnormally, and the RMB and other Asian soft money. The market generally believes that the exchange rate of the US dollar will continue to strengthen in the short term, and there is also pressure for further depreciation of the RMB against the US dollar in the short term. The HYCM Industrial Investment (UK) team believes that the main reason for the weak trend of RMB is the poor performance of PMI in China in April and the economic pain caused by epidemic prevention and control. In addition, with the soaring yield of 10-year US bonds, the spread between China and the United States is upside down, which naturally puts pressure on the RMB. However, while continuing to adhere to the existing dynamic zero clearing policy, China is also increasing its support for steady growth, which will effectively curb the sharp depreciation of the RMB. With the peak of inflation in the United States, the pressure of RMB depreciation is expected to ease in the future. In view of this, it is expected that RMB will fluctuate in the range of 6.75-6.90 against the US dollar in the second quarter of this year. From a technical point of view, the MACD column line continues to show a sharp deviation above the zero axis, indicating that the demand for US dollar buying is still strong, but the RSI indicator is seriously overbought, and the US dollar has a certain callback demand in the short term. Nevertheless, in view of the multiple positive factors of the dollar, bears still need to be cautious. At present, USD/RMB has effectively broken through and stood on the downward trend line formed by the 200-day moving average and April 20021. If the exchange rate can stand above the 6.8000 mark, it is expected to challenge the 6.9000 mark. From a technical point of view, the next key resistance level of USD/RMB is near the high point of 6.8446 on September 20, 2020. In the upward direction, the resistance focuses on 6.8320, 6.8346 and 6.9000; Downward, the support is located at 6.7900, 6.7835 and 6.7739.