The US dollar continued to strengthen against most major currencies yesterday, while the euro is currently consolidating near its lowest level since April 2025 against the dollar. Today, the dollar is largely unchanged against most currencies, perhaps reflecting a more cautious stance from traders ahead of the release of the US October Producer Price Index (PPI). Strong US employment data for October, released last Friday, coupled with Tuesday's October Consumer Price Index (CPI) exceeding market expectations, has led market participants to largely accept that the Federal Reserve will raise interest rates by 25 basis points in December. The market even sees a 12% probability of a 50 basis point rate hike in December. Previously, Fed Governor Waller stated that if core CPI reached 0.3% (which the current data exactly reached), he would support a one-off 50 basis point rate hike. Furthermore, Dallas Fed President Lori Logan stated on Tuesday that the Fed needs to quickly implement at least two more 25 basis point rate hikes to push inflation down. The US October PPI data has become the market focus. Market attention is now turning to the US October PPI data. The market expects the PPI month-on-month increase to fall from 1.3% to 0.4%, and the core PPI month-on-month increase to slow from 0.7% to 0.3%. Similar to the CPI data, year-on-year figures will not be released this time; however, if the monthly data exceeds expectations, it will lead the market to speculate that year-on-year inflation in November remains high, while the market is concerned that price pressures on the producer side will translate into persistently high consumer inflation in the future. If this occurs, market expectations for a 50 basis point rate hike in December will further intensify, causing US Treasury yields to rise and providing more upward momentum for the dollar. This is especially true if Fed officials speaking today reiterate the need for a more aggressive rate hike than previously expected. New York Fed President John Williams stated overnight that inflation remains stubbornly high and the Fed has more work to do. Boston Fed President Susan Collins, Fed Governor Michelle Bowman, San Francisco Fed President Mary Daly, and Governor Philip Jefferson will all speak today. Dallas Fed President Logan will also speak, but investors already heard her views on Tuesday. The market currently sees a 10% probability of a one-off 50 basis point rate hike in December, while pricing in a cumulative rate hike of nearly 90 basis points by September 2027. A new round of attacks on Saudi energy facilities and turmoil in the Strait of Hormuz, pushing up oil prices, have exacerbated market concerns about persistently sticky inflation, leading to bets that the Federal Reserve will accelerate its rate hike pace. The USD/JPY exchange rate is testing the 160 level, prompting Japan to issue intervention warnings. The market increasingly believes the Federal Reserve will begin raising rates in December, while simultaneously believing there is a 72% probability of a rate hike by the Bank of Japan in December. Driven by this expectation gap, the USD/JPY has continued to rise, briefly breaking through the 160 level overnight. Japan's Ministry of Finance's foreign exchange chief, Mimura, warned of excessively rapid exchange rate fluctuations on Thursday, and Finance Minister Katayama reiterated this warning today. Japanese Prime Minister Takaichi stated that Japan is maintaining close communication with the US to jointly maintain a stable and orderly foreign exchange market. The USD/JPY has encountered resistance and fallen back twice near the 160 level. However, Japanese officials are more concerned about the speed of the exchange rate's rise than simply the price level. If PPI data is stronger than expected, the USD/JPY exchange rate could break through the 160 mark today, given the divergence in monetary policy expectations between the two countries. The Nvidia saga drags down US stocks, and gold may continue its downward trend. In the US stock market, rising expectations of a Fed rate hike, coupled with the Nvidia saga, led to a slight decline in the three major US stock indices, with the Nasdaq falling by about 0.40%. Nvidia co-founder and CEO Jensen Huang announced his resignation, and Nvidia's stock price fell by as much as 14% intraday, closing down 4.3%, although it recovered slightly in after-hours trading. However, Nvidia's plunge did not trigger a widespread sell-off. AMD and Broadcom's stock prices both rose by more than 5%. The upcoming October PPI data will be the next major test for US stocks; if signs of persistent inflation reappear, the valuations of high-growth technology stocks will face downward pressure. Spot gold fell sharply, briefly testing support below 3870, before rebounding slightly. The overall market sentiment was dominated by negative factors, and gold gave back all the gains made between November 2nd and 9th. If PPI data pushes US Treasury yields and the US dollar higher, gold prices will likely hit even lower lows today.