Core Viewpoint - The US dollar has regained strength, surpassing the 100 mark and recovering the 200-day moving average for the first time since early March, supported by various factors including stronger-than-expected non-farm payroll data and hawkish FOMC meeting minutes [1][28]. Group 1: US Dollar Strength - The US government ending the shutdown and the release of September non-farm payroll data exceeding market expectations have weakened the logic for the Federal Reserve to cut rates due to deteriorating employment data [1][25]. - The hawkish tone of the October FOMC meeting minutes has reinforced market expectations that the Fed will not easily cut rates again in December [1][28]. - The weakness of the Japanese yen and British pound has also provided support to the US dollar index [1]. Group 2: Performance of Non-USD Currencies - Non-USD currencies have broadly declined against the strengthening dollar, with the Swiss franc dropping 1.77%, leading the G10 currencies [2]. - The Norwegian krone, Australian dollar, and New Zealand dollar also saw significant declines of 1.59%, 1.27%, and 1.23%, respectively, amid a drop in market risk appetite [2]. - The euro and British pound experienced declines of 0.93% and 0.55%, respectively, influenced by weaker economic data [2][29]. Group 3: Market Focus and Predictions - This week, the market will focus on a series of economic data from the US, particularly PPI inflation and weekly unemployment claims, as well as China's October industrial profits [3][22]. - The market's risk appetite may continue to be volatile, especially after a significant drop in US stocks last week, which could pose a risk to the dollar's further rise [3][36]. - The predicted range for USD/CNY is between 7.09 and 7.14, with expectations for the RMB to maintain a moderately strong trend overall [3][4]. Group 4: RMB Exchange Rate Stability - The RMB showed resilience against the dollar's rise, with only a slight depreciation, while appreciating against a basket of currencies [4][11]. - The CFETS RMB exchange rate index rose by 0.4%, indicating a stable performance despite external pressures from a strong dollar [4][11]. - The RMB's demand is expected to remain balanced, supported by expectations of a moderate appreciation and seasonal factors as the year-end approaches [4][22]. Group 5: UK Economic Outlook - Recent UK economic data has confirmed a weak outlook, raising market expectations for a Bank of England rate cut, with the probability of a cut in December now around 90% [29][33]. - The UK unemployment rate rose to 5%, and retail sales data showed a significant decline, further supporting the case for a rate cut [29][33]. - The upcoming fiscal budget report may also impact the pound, with expectations of increased government borrowing potentially leading to bond market pressures [35].

Core Viewpoint - The recent strength of the US dollar is largely attributed to the significant depreciation of the Japanese yen due to political changes in Japan, despite the overall gloomy outlook for the dollar as the Federal Reserve is expected to lower interest rates [2][3]. Group 1: Economic Factors - The US productivity growth is projected to remain strong, with a 1.6% increase in 2023, significantly higher than the OECD average of 0.6% and contrasting with a decline of 0.9% in the Eurozone [5]. - The second quarter of 2023 saw an annualized productivity growth rate of 3.3% in the US, with expectations that this could rise to 5.0% in the third quarter [8]. - The potential for a rising trend in productivity growth is linked to advancements in artificial intelligence, with the US expected to capture the largest share of the productivity benefits due to its leading position in AI, strong intellectual capital, and a flexible labor market [9][10]. Group 2: Interest Rates and Investment Climate - The report suggests that artificially lowering real interest rates could lead to economic overheating, especially as productivity improvements and profitability are already driving robust economic growth [12]. - The current US policy interest rates, adjusted for inflation, remain high by global standards, and significant aggressive rate cuts are unlikely in the short term [12]. - Concerns about the US policy's recklessness and the potential for an AI bubble are acknowledged, but the lack of attractive alternatives for capital outflow from the US is emphasized [15]. Group 3: Market Sentiment - Despite prevalent bearish sentiment towards the dollar, the situation may not be as straightforward, as the US remains a dominant player in the global economy, and the potential for a significant alternative investment option is limited [15]. - The comparison to the internet bubble of the 1990s indicates that the current market dynamics may still be in the early stages of development, suggesting that the outlook for the dollar could be more complex than commonly perceived [15].