USD surged for the fourth consecutive day to the one-year high against major currencies. The strength of the USD primarily came from the expectations that tapering would start in November. An interest rate hike would also possibly come in late 2022. The DXY Index currently trades around 94.302. Despite the potential government shutdown due to the debt ceiling, USD continues its uptrend. Meanwhile, JPY has been negatively impacted by the rising US treasury yields, as higher rates usually attract flows from Japan. The election of Fumio Kishida as the leader of Japan’s ruling party, effectively the next prime minister, has limited impact on the currency as of now.
China’s September PMI was released at 49.6, lower than the expectation. However, non-manufacturing PMI was higher, at 53.2. Recently, the manufacturing industry has been heavily hit by the power outage. Moreover, Evergrande’s debt continues to weigh on stocks in Asia.