On Tuesday (October 17th), the US dollar remained at a high level after the Fed’s next chairman’s speculation and hawkish data. According to foreign media quoted White House officials, the chairman of the Fed has narrowed to five. President Trump will announce the Fed chairman before the visit to Asia on November 3. With the recovery of the US dollar, the financial market has been raging: spot gold and silver have fallen sharply, with spot silver falling more than 1%, and “piggy teammates” crude oil also falling more than 1%. Non-US currencies led by the euro and the pound are losing ground. During the day, suppressed by the dovish speeches of a number of Bank of England officials, the pound "fly down" and plunged 135 points.

Good news keeps the dollar open and smiles at the financial market.

The US Labor Department announced on Tuesday that US import prices rose by 0.7% in September from an earlier month, and are expected to rise by 0.5%. US September export prices rose by 0.8% from the previous month, and are expected to rise by 0.4%.

The annual import and export prices in September were in line with expectations, rising by 2.7% and 2.9% respectively.

(America's import and export price index annual rate chart, source: Zerohorge, FX168 Financial Network

The Wall Street Journal commented that the US import price index in September showed better-than-expected monthly rate, with fuel prices soaring, and the price of imports excluding oil rose by 0.3% from the previous month; although Hurricane Harvey and Elma had some influence on the collection of import price data. However, it still reflects the rising overall price level in the United States.

According to data released by the Federal Reserve on Tuesday, industrial production growth in September was in line with estimates, and Hurricane Harvey and Ilmarah lowered industrial production by 0.25 percentage points in September.

Data show that US industrial production in September increased by 0.3% from the previous month, estimated to increase by 0.3%; US manufacturing output in September increased by 0.1% from the previous month, estimated to increase by 0.1%; US capacity utilization rate in September was 76.0% , estimated at 76.2%.

(US industrial production monthly rate chart, source: Zerohod, FX168 financial network)

Reuters commented that the data is calculated by the Federal Reserve, including manufacturing, mining and electrical use. The Fed said in the report that as the impact of Hurricane and Elma began to decrease, US industrial output rebounded in September, building Hydropower production began to rebound; the hurricane in August caused production suspension of oil, gas and chemical plants along the Gulf Coast of the United States, dragging down industrial output. Although the impact in September began to subside, output growth was still dragged down by 0.25%.

According to data released by the National Association of Home Builders (NAHB) on Tuesday, the US NAHB housing market index rose in October and was higher than expected.

NAHB said in a statement that the NAHB home market index rose to 68 in October, and the analysts who were interviewed by Reuters had an estimate of 64, compared with 64 in September.

The sales index for single-family homes in October was 75. In September, it was revised to 70. The potential buyer traffic index for October was 48, compared with 47 in September.

After the data came out, the dollar index on Tuesday rose to one-week high 93.73. In addition to the support brought by the data, the rise in US Treasury yields also boosted the dollar. Earlier reports said that US President Trump favored a Fed chairman of the policy-oriented hawks.

(US dollar index 30 minutes chart source: FX168 financial network)

US Treasury yields rose on Monday after reports that US President Trump favored Stanford University professor John Taylor as the next Fed chairman, and Federal Reserve Chairman Yellen said the US economy remained strong over the weekend.

Taylor is an economist at Stanford University and an expert in monetary policy. The proposed Taylor rule is a standard reference tool for global central banks and economists. It is reported that in addition to his academic background, he also has rich political experience. He generally believes that his policy bias is relatively high. The hawks have agreed that the Fed will gradually withdraw from the easing policy.

Taylor advocates a set of rules to formulate monetary policy. The outside world believes that he is more hawkish than Yellen, so he may speed up the pace of interest rate increase, and the dollar is thus boosted.

Lee Hardman, a foreign exchange analyst at Mitsubishi UFJ Financial Group (MUFG), pointed out that it would not be surprising if the dollar jumped 3-5% at the beginning.

"The Fed's policy shifts to a more rule-based strategy. This possibility will be seen as not so good for the financial market, and it will make the Fed's chances of sharply raising interest rates in the next few years greater than the current market digest," he said.

According to the Wall Street Journal, the White House official said that the Fed chairman's candidate has now narrowed to five. Sources said that Trump's Fed chairmanship includes Fed Governor Powell, White House National Economic Council Director Cohen, current chairman Yellen, who will expire in February, and former Federal Reserve Governor Walsh, but investors said Walsh was elected. The possibility has dropped.

White House officials said that US President Trump will announce the candidate for the Fed chairman before his visit to Asia on November 3.

According to one source, US President Trump will meet with Federal Reserve Chairman Yellen on Thursday, which is one of the steps he has taken to find a new Fed presidential candidate.

Affected by the strength of the US dollar, the euro fell 0.3% to a one-week low of 1.1755, which has fallen nearly 3% since hitting a two-and-a-half-year high last month.

“The market currently believes that the European Central Bank will not be as strong as expected last month, which will push the German bond yields down, which in turn will benefit the dollar against the euro,” said Junichi Ishikawa, senior currency strategist at IG Securities in Tokyo.

As the dollar rebounds, spot gold is low at $1281.20 per ounce, falling more than $15 from the previous day. Spot silver fell below the $17 mark, refreshing the new low to $16.92 per ounce since October 10, and fell more than 1% in the day.

(Spot gold 30 minutes chart source: FX168 financial network)

There are rumors that Fed Chair Yellen’s successor will be more inclined to raise interest rates, and gold continued yesterday’s decline.

Martin Arnold, ETF's securities commodities analyst, said, "The possibility of the US hawks and the Fed will need to raise interest rates this year is contributing to the bullish dollar environment."

US and the two oils expanded the decline, WTI crude oil fell to 51.21 US dollars / barrel, Brent crude oil fell to 57.18 US dollars / barrel, a decline of more than 1%.

(US oil 30 minutes map source: FX168 financial network)

On Tuesday, as war between Iraq and Kurdish forces threatened supply and political tensions between the United States and Iran intensified, oil prices fell sharply to intraday lows.

Crude oil prices have been trading in the range for several months, with supply cuts led by OPEC supporting crude oil prices, but the increase in US production has limited the market. But as demand looks stronger than at any time in recent months, especially in China, prices have risen sharply this month.

Iran’s deputy oil minister said in support of the extension of the OPEC production reduction agreement until the end of 2018. Iran plans to increase crude oil production capacity to 4.7 million barrels per day.

British bank official "pigeon" slammed the pound and heard the news fell more than 100 points

Sterling fell to a five-day low on Tuesday after the Bank of England policymakers’ comments were interpreted by the market as doves, although the latest inflation data was in line with expectations.

GBP/USD fell 0.5% to an intraday low of 1.3152, down 135 points from the 1.3287 high and then rebounded slightly to around 1.3181.

(£/$30 min chart source: FX168 Finance Network)

According to foreign media quoted two European traders, the short-term sterling long positions established above 1.3250 and 1.3270 were surrendered.

Technically, the next support for GBP/USD is at 1.3204, the 61.8% Fibonacci retracement of the October 12-13 rally, then at 1.3145, the 55-day moving average.

A number of members of the Bank of England's Monetary Policy Committee (MPC) spoke to the Parliament's Finance Committee.

Bank of England Governor Mark Carney testified in parliament that "a rate hike may be appropriate in the coming months. Interest rates, not QE, will be a policy tool for some time to come."

Carney also said that inflation is expected to peak above 3% in October.

Bank of England MPC member and vice president Ramsden said that the upward pressure on the sterling depreciation against inflation will begin to weaken in the coming months. The Monetary Policy Committee agreed in September that the market did not fully reflect the number of rate hikes within the horizon. I am not in the list of most MPC members who support recent interest rate hikes.

Bank of England Monetary Policy Commissioner Tenreyro said he is not prepared to vote for a rate hike at the policy meeting in November. The immature rate hike may lead to more interest rate cuts in the future, and the cost of making mistakes at the rate hike is high.

“The official speech consistently showed a dovish and cautious stance within the Bank of England’s policymakers, reflecting the growing debate within the central bank on the interest rate path,” said Neil Jones, head of currency sales at Mizuho’s hedge fund.

Barclays wrote that Bank of England Governor Carney made a hearing today to provide clues to the policy stance of two new MPC members; in general, today’s statement from Carney supports our view of raising interest rates in November, but Concerns and views on salary growth suggest that most members of the MPC will find it difficult to continue raising interest rates in the future, because today’s statement is in contradiction with the Fleet Commission’s September “data indicates a modest increase in wages”; new members Tenreyro and Ramsden are The outlook is mixed, but they agree that salary growth is still insufficient. In addition, we believe that inflation will start to slow down steadily at the beginning of next year. Therefore, we believe that interest rates will increase by 25 basis points in November, but it is difficult to raise interest rates in the future.

Earlier data on Tuesday showed that UK September inflation hit 3%, higher than the 2% Bank of England target, but in line with expectations.

“Inflation data is in line with our expectations, especially overall inflation and core inflation data, so the report has only a slight impact on the GBP/USD,” said Alvin Tan, currency strategist at Societe Generale.

Tan said that the dollar's overall rise helped the pound to outperform the euro on Tuesday morning.

According to the Wall Street Journal, Yuxin Bank believes that the Bank of England raised interest rates by 25 basis points on November 2, "almost certain," but it did not anticipate the Bank of England's subsequent interest rate hike. The bank believes that the UK economy will slow down and inflation will It quickly reached its peak and domestic inflationary pressures were weak, while the uncertainty associated with Brexit remained high.

Boris Schlossberg, strategist at BK Asset Management, said that UK's inflation rate in September has risen more than five-year highs, and the Bank of England committee has published dovish testimony. Although it has not changed the market's expectations for the Bank of England's interest rate hike in November, it is in the Bank of England. After Rero said that the salary growth rate is very weak, some people began to question the rate hike. For monetary policy makers, it is “painful” to provide sufficient easing to stimulate economic growth while suppressing inflation, monetary policy makers. Or “unwilling” to promise to tighten monetary policy.

Traders are concerned about UK labor market data released on Wednesday and retail sales data released on Thursday.