With Trump's overwhelming victory in the first round of the US election debate, coupled with high interest rates providing continuous support for the US dollar, it seems that the strong dollar is becoming a major concern for many monetary policy decision makers around the world at the beginning of the second half of the year.

Although the far-right leading advantage did not meet market expectations in the first round of voting for the French National Assembly, causing the US dollar index to fall during the Asian session on Monday, prior to this, the Bloomberg US Dollar Index had risen for six consecutive weeks, marking the longest rally since February. Meanwhile, after Trump emerged as the winner in the first round of the US election debate, the US dollar bulls seemed to have the chance to gain a crucial bull market.

Antje Praefcke, senior foreign exchange analyst at Deutsche Bank in Frankfurt, wrote: "The likelihood of Trump winning is growing, which may provide potential support for the US dollar in the coming weeks and months. Trump was more aggressive in the TV debate last Friday."

Previously, market analysts widely expected that Trump's victory would be more favourable to the US dollar. Alan Ruskin, strategist at Deutsche Bank, said in the first quarter of this year that "the 'Trump effect' is assumed to be favourable to the US dollar to some extent because it is negative for non-US currencies such as the euro and the Mexican peso. Traders are aware that for different reasons, Trump's impact on trade and geopolitics will at least initially be bullish for the US dollar."

Deutsche Bank strategists also said before the first round of the US election debate last week that the US election could provide more room for the US dollar to rise, and they would consider revising down their forecast for the euro-dollar exchange rate to closer to parity if the US adopts aggressive trade protectionism policies.

Looking at the performance of the global foreign exchange market in the first half of this year, with the continuous rise of the US dollar index, non-US currencies have felt enormous pressure: the yen has fallen to its lowest level since 1986, and the euro had its worst monthly performance since January last month.

A set of statistics shows that in June, almost all emerging and developed country currencies against the US dollar have depreciated.

Since when the Federal Reserve launches quantitative easing policy is still unclear, the global monetary policy disputes undoubtedly remain in favour of the US dollar. Tony Rodriguez, head of Nuveen's fixed income strategy, said that the combination of slowing economic growth and strong inflation means that the Federal Reserve will take (loose) action very slowly and patiently, which is favourable for the strong US dollar.

Consistent with the cautious attitude of the Federal Reserve, with the beginning of the second half of the year, the prospect of easing monetary policy seems to be increasingly likely to be achieved in most parts of the world. Non-US central bankers are becoming increasingly concerned about the downward pressure on the economy. Global policy makers may not pay too much attention to their own loose policies due to the US Federal Reserve delaying the interest rate cut.

Currently in Europe, the Swiss National Bank has cut interest rates twice this year, the European Central Bank has cut interest rates once, and the Bank of England may also cut interest rates soon.

A series of risk events this week cannot be ignored.

Of course, in the first week of the second half of the year, if US dollar bulls want to maintain their first half gains and further expand profits, it may not be an easy task: a series of political and macroeconomic risk events this week may bring more uncertainty to the stock market, bond market, and foreign exchange market.

The first to be affected is undoubtedly the first round of voting for the French National Assembly, which has just ended over the weekend. The euro rose in the early Asian trading session on Monday, as traders began to digest the news that France's far-right party, represented by Marine Le Pen, would have an advantage in the first round of voting for the parliamentary elections, and signs showed that the party's lead was not as great as some pre-election polls had suggested.

Preliminary results show that the far-right National Alliance party is leading the centrist alliance of President Emmanuel Macron and the left-wing New People's Front, but the number of votes it may receive after the second round of voting may not be enough to win an absolute majority. Currently, the market's focus has shifted to whether the party can garner enough support in the second round of voting on July 7th to hold an absolute majority in the National Assembly. Macron and other opponents of the National Alliance have been devising strategies to keep this far-right party out of the power center.

In addition to France, the UK will also hold a general election this Thursday. The election results may be announced Friday morning. The opposition Labour Party is expected to win an easy majority of seats. Given that the election results look relatively certain and the Labour Party does not have a plan for large-scale government spending, the impact on the pound, UK government bonds, and UK stocks may be slightly positive, but limited.

In a report, Investec economist Lottie Gosling said, "While the Labor Party's approval rating has fallen somewhat in the past five weeks, its advantage over the Conservative Party has been maintained. In the remaining days of the election, there should be no surprises except for the huge victory of the Labor Party on July 4th. Therefore, it is expected that the UK financial market will not experience too much volatility during the election."

Risky events abound this week in central bank and macroeconomic terms.

The European Central Bank will hold its annual symposium in Sintra, Portugal from July 1st to 3rd. This seminar has always been regarded by the industry as the "global central bank annual meeting" hosted by the European Central Bank, on par with the Jackson Hole Annual Meeting hosted by the Federal Reserve. The speech guests attending the year's meeting include Federal Reserve Chairman Powell and European Central Bank President Lagarde, and there may be some new clues on monetary policy at that time.

According to analysts at Morgan Asset Management, as long as the Fed keeps the borrowing costs higher relative to other central banks, the dollar will continue to benefit. However, they also warn that this support may gradually weaken at some point.

In addition, according to a research report from CITIC Securities, the Federal Reserve is currently maintaining a neutral stance as a whole, and it is expected that Powell will "exchange time for space" and wait for more good inflation data to suppress U.S. demand and inflation.

In addition, on this Friday, the monthly non-farm employment data released regularly will meet with investors again. The industry currently expects the report to show an increase of 188,000 non-farm jobs in the United States last month, and the unemployment rate will remain stable at 4%.

Earlier, the unexpectedly large increase of 272,000 new non-farm jobs in the United States in May once caused a short-term drop in the U.S. bond market. However, many groups of recent U.S. economic data have shown signs of weakness. The trend of positive inflation, coupled with the signs of economic slowdown, has led many economists to believe that the Fed should lean towards early interest rate cuts.

Michael Pierce, deputy chief economist for the Oxford Economic Research Institute, wrote in a client report last weekend, "Signs of weakness in the labor market in recent times suggest that Fed officials also need to pay attention to the risks to full employment within their remit."

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