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A collection of positive and negative news that affects the foreign exchange market
Wonderful introduction:
A person's happiness may be false, and a group of people's happiness cannot tell whether it is true or false. They squandered their youth and wished they could burn it all, and that posture was like a carnival before the end of the world.
Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Official Website】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
1. Macroeconomic data: The cooling of inflation and the differentiation of growth are intertwined
The US PPI exceeds expectations to increase the expected rate cut
The US PPI rose 2.2% year-on-year in July, lower than the expected 2.3%. The core PPI remained the same month-on-month, the moderate increase in four months. Data shows that supply chain pressure continues to ease, falling service prices offset rising www.xmh100.commodity costs, and market bets on the Fed's 50 basis points cut in September have heated up. The US dollar index DXY dived to 103.07 in the short term, non-US currencies generally strengthened, the euro rose to 1.1753 against the US dollar, and the Australian dollar broke through 0.6557 against the US dollar. If subsequent CPI data falls simultaneously, the US dollar may be under further pressure.
Eurozone GDP resilience coexisted with weak French inflation
Eurozone's GDP annual rate revised in the second quarter was 0.6%, maintaining a moderate growth trend, but the downward risks of Germany's economy were prominent, and the ZEW economic prosperity index fell to -55.3, approaching the level of the 2008 financial crisis. France's July CPI final month-on-month rate was 0.2% and annual rate was 2.3%, both lower than expected, indicating that the decline in energy prices suppressed the rebound in inflation and may delay the pace of the European Central Bank's policy shift. The euro is supported by economic resilience in the short term, but we need to be wary of the drag on the German recession in the medium and long term.
The weak UK economic data suppressed the pound
The initial GDP annualized rate in the second quarter is expected to grow only 0.3%, lower than the previous value by 0.5%. The monthly GDP rate in June may remain the same, indicating insufficient momentum for consumption and investment. In addition, the www.xmh100.commodity trade deficit in June may widen to 18 billion pounds. Coupled with the structural contradictions after Brexit, the pound faces strong resistance against the US dollar at the 1.35 mark, if the data falls below the data after release1.3450, downlink space may be opened.
2. Central Bank Policy and Geopolitics: Rate Cut Game and Risk Premium Volatility
Federal Rate Cut Expectations Dominate the Market
Richmond Fed Chairman Barkin hinted that "if the inflation path continues to improve, the rate cut in September is reasonable", which echoes Becent's remarks on "50 basis points to cut interest rates." The current market pricing probability of interest rate cuts in September is 78%, and the cumulative interest rate cut in December is 100 basis points. The US dollar index fell for two consecutive times, US Treasury yields generally fell, and the 10-year yield fell below 4.25%, and funds shifted from the US dollar to high-interest currencies and risky assets.
The Bank of Japan's policy shift signal begins
Japan's CPI has exceeded its 2% target for three consecutive years. Some central bank directors have called for abandoning the "potential inflation" indicator and turning to focusing on overall inflation and expectations, clearing obstacles for interest rate hikes in October. The Japanese bond market responded violently, with no transactions on 10-year treasury bonds throughout the day, and the bid multiple for the five-year auction hit the lowest since 2020, with the Japanese yen rising to 146.78 against the US dollar. If policy adjustment expectations heat up, it may further rebound to the 145 mark.
The U.S.-Russia meeting is approaching and triggering geopolitical games
Trump and Putin are scheduled to hold talks on August 15, and the market focuses on the possibility of a ceasefire agreement between Russia and Ukraine. CITIC Securities pointed out that if only a short-term ceasefire is reached, it may cause a geopolitical premium for gold, crude oil and the US dollar to fall, and risk preferences for European and US stocks will rise; if it involves lifting sanctions on Russia, it may substantially ease the pressure on energy supply and suppress inflation expectations. The current US dollar index is supported by safe-haven demand, but if the meeting releases a slowdown, the US dollar may accelerate its pullback.
3. Market sentiment and asset linkage: Rising risk appetite and pressure on www.xmh100.commodity currency
The sharp rise in US stocks boosted risky assets
The Dow Jones Industrial Average rose more than 460 points, and Chinese stocks outperformed the market. Tencent and Alibaba rose 7.4% and 3.6% respectively. Funds shifted from large technology stocks to small-cap stocks, and the Russell 2000 index rose 2.1%. The rebound in risk appetite has driven the strengthening of risk currencies such as the euro and the pound, but we must be wary of profit-taking caused by sudden changes in the geopolitical situation.
The plummeting crude oil dragged down www.xmh100.commodity currencies
Affected by inventory overexpected inventory accumulation and pessimistic forecasts of the IEA, WTI crude oil fell to $62.65 per barrel, and Brent crude oil fell below the $66 mark, hitting a new low since early June. The Australian dollar plunged to 0.6549 in the short term, and the Canadian dollar was under pressure against the US dollar at 1.3612. If oil prices fall further to US$60, www.xmh100.commodity currencies may face greater selling pressure.
The RMB exchange rate was suppressed by economic data
China added 1.16 trillion yuan in social financing in July, RMB loans decreased by 50 billion yuan, and the M2-M1 scissors gap narrowed, indicating that the transmission of broad money to broad credit is not smooth. The RMB against the US dollar's mid-price depreciated to 7.18, and the offshore exchange rate was under pressure at 7.20. If the subsequent economic stimulus policy is less than expected, it may weaken further.
IV, technical and key points: the www.xmh100.competition between bulls and bears intensified
Euro vs. USD: 1.1750 is a short-term watershed
After the euro broke through the key resistance of 1.17, the RSI indicator rose to 65, which was overbought in the short term but strong momentum. If it stands firmly at 1.1750, it may rise to the 1.18 mark; on the contrary, if it falls below 1.1680, it may fall back to the 1.16 support.
Dollar vs. Japanese Yen: The game at the 147 mark is fierce. The yen is supported by policy shift towards expectations. The US dollar vs. Japanese Yen fell below 147 in the short term, but the long-term downward trend has not yet been confirmed. If the Bank of Japan sends a clear signal of interest rate hikes, it may accelerate the decline to 145; if the Federal Reserve expects a rate cut to cool down, it may rebound to 148. Pound against the US dollar: 1.35% long and short life and death line
Pound faces strong resistance around 1.35. If the UK GDP data is weak, it may fall to 1.3450; if the data exceeds expectations, it may break through 1.3550 and open upward space.
5. Trading strategies and risk warnings
Euro/USD: Go long on dips, stop loss 1.1680, target 1.1800.
Dollar vs. Japanese Yen: Mainly wait-and-see. If it falls below 146.50, you can short it lightly, with a target of 145.00.
GBP/USD: Wait and see before the data is released. If it falls below 1.3450, you can short it, with a target of 1.3350.
Australia dollar against the US dollar: rebound to short around 0.6580, stop loss 0.6620, target 0.6500.
Risk warning:
Geopolitical events (US-Russia meeting, situation in the Middle East) may cause severe market fluctuations.
Federal officials' speeches and economic data (CPI, non-farmers) may change the pace of expected rate cuts.
The transmission effect of www.xmh100.commodity price fluctuations on www.xmh100.commodity currencies needs to be closely tracked.
The above content is all about "【XM Forex Official Website】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully www.xmh100.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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