Federal Reserve Governor Waller advocates gradual interest rate cuts. Analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on October 16

Global market overview

1. European and American market conditions

The three major stock indexes have mixed gains and losses. The Dow Jones Industrial Average fell 17.15 points, or 0.04%, to 46253.31 points; the Nasdaq rose 148.38 points, or 0.66%, to 22670.08 points; the S&P 500 Index rose 26.75 points, or 0.40%, to 6671.06 points. Major European stock indexes were mixed. The European Stoxx 50 index reported 5600.65, a decrease of 0.02%. The UK's FTSE 100 index closed at 9424.75, down 28.02 or 0.3% from the previous trading day; France's Paris stock market CAC40 index closed at 8077, up 157.38 or 1.99% from the previous trading day; Germany's Frankfurt stock market DAX index closed at 24181.37, down 55.57 or 0.23% from the previous trading day.

2. Interpretation of market news

Fed Board Governor Waller advocates gradual interest rate cuts

Fed Board Governor Waller said that officials can gradually relax monetary policy by cutting interest rates by 25 basis points each time to support the weak labor market; at the same time, Milan continues to advocate more substantial interest rate cuts. Waller said on Thursday: "You don't want to make mistakes, and the way to avoid them is to act cautiously - cut by 25 basis points first, observe the results, and then decide what to do next." Milan reiterated that day that a more substantial 50 basis point interest rate cut should be adopted. Trade tensions have increased the downside risks faced by the economy, thus requiring more rapid monetary policy relaxation. "I think weThere is a high probability that there will be three interest rate cuts of 25 basis points each this year," Milan said.

The Fed Milan said it supports a 50 basis point interest rate cut this month, warning of trade risks

Fed Governor Milan said he supports a 50 basis point interest rate cut this month, and Reaffirming that trade tensions create uncertainty for the economy and increase downside risks to growth, Milan said in an interview on Thursday: "If monetary policy maintains the current level of tightening and the economy suffers a similar shock, this will significantly amplify the negative impact of that shock. He added that he hopes to support a 50-basis-point rate cut at the policy meeting on October 28-29, although the www.xmh100.committee is more likely to choose a 25-basis-point rate cut as it did in September. "I think there is a high probability that we will have three 25-basis-point rate cuts this year," he said. Fed Chairman Powell has previously hinted that , in view of the slowdown in hiring that may lead to a rise in unemployment, the Federal Reserve is planning to cut interest rates by another 25 basis points this month. However, some policymakers still say they should remain cautious because inflation is still above the 2% target.

Germany said it would lend Russian frozen assets to Ukraine

The German Chancellor silently said. Russia said today (October 16) that the EU can use the assets of the Russian Central Bank that are being frozen to provide Ukraine with additional interest-free loans totaling approximately 140 billion euros. He emphasized: "This move is not to prolong the war, but to end the war." After the conflict between Russia and Ukraine escalated in 2022, Western countries froze approximately US$300 billion in Russian overseas assets. Since most of the frozen assets were located in Europe, the United States continued to push Europe to reach a consensus on the use of funds.

The release of data on the impact of the U.S. government shutdown, and Federal Reserve officials’ intensive statements attracted attention

⑴ Affected by the federal government shutdown, it was originally scheduled to be released on Thursday Most economic data such as PPI, retail sales and weekly unemployment benefits cannot be released on time. ⑵ The Philadelphia Fed manufacturing index is expected to fall sharply from 23.2 to 8.0, reversing the abnormal increase of 23.5 points last month. The New York Fed index has shown a www.xmh100.complete recovery on Wednesday. ⑶The NAHB housing market index is expected to rise slightly to 33, hovering in the 32-33 range for the fifth consecutive month, indicating that builder confidence continues to be extremely pessimistic. ⑷Federal Reserve officials ushered in a day of intensive speeches, including Governor Waller’s (dovish) economic outlook speech and Governor Barr’s (dovish) discussion on stablecoins. ⑸Despite the lack of data, the market expects P PI increased by 0.3% month-on-month, and retail sales increased by 0.4%, indicating that inflationary pressure was moderate and consumption remained resilient. ⑹ The weekly unemployment benefit data has been absent for two weeks due to the shutdown, and may be distorted by the furlough of federal employees, making it difficult to reflect the true job market conditions.

Trump’s new energy policy breaks the ice, investing US$1.6 billion in power grid upgrades

⑴ The Trump administration approved its first loan during its term of office on Thursday, providing US$1.6 billion in financing to American Electric Power www.xmh100.company subsidiaries. ⑵The funds will be earmarked for the replacement and reconstruction of 5,000 miles of electric power transmission lines across five states. ⑶Project cover stampKey areas include Indiana, Michigan, Ohio, Oklahoma and West Virginia. ⑷The Ministry of Energy made it clear that this move is aimed at improving grid reliability and transmission capacity in rapidly growing regions. ⑸The approval came after a review of the US$400 billion loan program office, which had previously faced internal criticism for approving billions of dollars in loans during the transition period.

The Bank of Israel maintains a hawkish stance, and the deputy governor stated that he is not in a hurry to cut interest rates

⑴The deputy governor of the Bank of Israel, Abir, made it clear that monetary policy will maintain a cautious stance and will not rush to start an interest rate cut cycle. ⑵ Despite the ceasefire in Gaza and inflation falling last month, the central bank believes that the economy is performing well and improving consumer demand may bring price pressures. ⑶ Abir pointed out that the current monetary policy is neither overly tight nor behind the curve, and is consistent with inflation levels above the target. ⑷Labor supply is expected to increase, but the surge in consumer demand brought about by the ceasefire may offset its inhibitory effect on inflation. ⑸The central bank believes that the market is functioning well and there is no need to intervene in the shekel exchange rate at present, showing sufficient confidence in the domestic currency. ⑹ The deputy governor called on the government to take advantage of the slowdown in defense spending to reduce the debt-to-GDP ratio and consolidate fiscal sustainability. ⑺The central bank emphasized that it would not change its policy path due to a short-term ceasefire, demonstrating the forward-looking and independent nature of its decision-making.

France’s political crisis has been suspended, and the prime minister narrowly passed the no-confidence vote

⑴ The French government successfully survived the first round of no-confidence vote, with 271 members supporting removal, falling short of the 289-vote threshold. ⑵ Prime Minister Le Cornou successfully won the support of some left-wing MPs by promising to suspend pension reform. ⑶ This vote was initiated by the far-left camp, and the results showed that the government camp has gained enough trust from members of the parliament. ⑷The no-confidence motion proposed by the far-right National Alliance is about to be voted on, and the government faces a second round of tests. ⑸Le Cornu’s political www.xmh100.compromise strategy has temporarily worked, but the coalition government still faces severe governance challenges.

British inflation data hits hard, and interest rate cuts in four quarters hang on a thread

⑴The British September inflation data, which will be released on October 22, will become a key benchmark for the Bank of England’s interest rate decision in the fourth quarter. ⑵ If the CPI reading is below 4%, it may strengthen the dovish view and push the central bank to implement an interest rate cut on November 6 or December 18. ⑶ If the CPI data is higher than the peak forecast of 4%, the possibility of an interest rate cut in November will be basically ruled out and the probability of easing before Christmas will be reduced. ⑷The Bank of England last month maintained its forecast that CPI would reach a peak of 4% in September, and the inflation rate in July and August was stable at 3.8%. ⑸The Bank of England decided to cut interest rates to 4.0% by a slim majority of 5-4 in August, showing obvious internal differences. ⑹ Data on Thursday showed that the British economy only grew by 0.1% in August and contracted by 0.1% in July, indicating a clear lack of growth momentum. ⑺The current market pricing shows that the probability of an interest rate cut in November is 11%, and the probability of an interest rate cut before December 18 rises to 44%.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 20:23 Beijing time, EUR/USD has risen and is currently at 1.1655, an increase of 0.07%. Before the New York session, the price (EUR/USD) declined in the last trading session to collect its previous gains and try to gain bullish momentum that may help it recover and rise again, moreover, unloading its overbought conditions on the relative strength indicator, especially with the emergence of negative signals, as it trades above the EMA50, as dynamic support persists due to the influence of a short-term bullish technical formation (double bottom pattern).

GBP/USD: As of 20:23 Beijing time, GBP/USD has risen and is now at 1.3430, an increase of 0.21%. Before the New York market opened, (GBPUSD) price surged on the last trading day, supported by positive signals from the relative strength indicator. After unloading the overbought conditions of the previous trading day, it broke through the main bullish trend line in the short term and exceeded the resistance of EMA50, immediately getting rid of negative pressure to strengthen the expansion of recent gains.

Spot gold: As of 20:23 Beijing time, spot gold has risen and is currently trading at 4248.35, an increase of 0.96%. Pre-market in New York, (gold) prices rose on the last trading day, continuing to hit new all-time highs, continuing to find positive support as it traded above the EMA50, where the short-term primary bullish trend dominated and traded along a supportive secondary trendline after reaching overbought levels, hindering the final advance.

Spot silver: As of 20:23 Beijing time, spot silver rose and is currently trading at 52.988, an increase of 0.05%. Pre-market in New York, (silver) prices rose in the last session after unloading overbought conditions on the relative strength indicator, opening the way for more gains in the near term, preparing to attack the key resistance at $53.50, supported by its continuous trading above the EMA50 and trading along the secondary trendline.

Crude oil market: As of 20:23 Beijing time, U.S. oil rose, now trading at 58.190, an increase of 0.64%. Before the New York market opened, the price of (crude oil) continued to fluctuate at the intraday levels of the previous session, supported by positive signals from the Relative Strength Index, but faced negative pressure as it traded below the EMA50, with a mainly bearish trend prevailing in the short term, while trading along the trend line, which intensified the negative pressure.

4. Institutional view

Goldman Sachs ten-year interest rate prediction: the United States leads the way at 4.5%, Europe continues to lag behind

⑴ Goldman Sachs released its government bond yield forecast for 2035, predicting that the U.S. 10-year Treasury bond yield will rise to 4.5%, further rising from the current level of 4.2%. ⑵Two major factors driving U.S. bond yields upward include: AI technology driving real GDP growth to remain at around 2%, and the U.S. debt-to-GDP ratio rising by about 2 percentage points each year in the next two years. ⑶The yield on German 10-year government bonds is expected to be 2.75%, which is a significant discount www.xmh100.compared to the United States, reflecting that Europe's long-term nominal growth is constrained by demographic structure and insufficient inflation potential. ⑷The UK 10-year government bond yield is expected to be 4.25% , as inflation, deficits and policy rates gradually normalize, but the legacy of historical crises will prevent it from effectively falling below 4%. ⑸ Japan’s 10-year government bond yield target is set at 2.0%, provided that the economy achieves a sustainable 2% inflation target, then the yield will be able to maintain a higher level.

The above content is all about "[XM Foreign Exchange Market Analysis]: Fed Governor Waller advocates gradual interest rate cuts, short-term trend analysis of spot gold, silver, crude oil, and foreign exchange on October 16". It is carefully www.xmh100.compiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!

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