Wonderful Introduction:
Green life is full of hope, beautiful fantasy, hope for the future, and the ideal of longing is the green of life. The road we are going tomorrow is green, just like the grass on the wilderness, releasing the vitality of life.
Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Market Analysis】: 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:
Favorites:
U.S. PPI data exceeds expectations to strengthen interest rate hike expectations
The US July Producer Price Index (PPI) released on August 21 rose 3.3% year-on-year, far exceeding the expected 2.6%. The core PPI rose 3.7% year-on-year, hitting a new high in the past year. Data shows that inflationary pressure in the United States remains, and the market's expectations for the Federal Reserve's 50 basis points cut in September have cooled significantly, and interest rate futures show that the probability of a 25 basis points cut has dropped to 75%. Cleveland Fed Chairman Hamak made a clear statement that if the decision was made on the same day, he emphasized that "inflation is too high and on an upward trend." Although Atlanta Fed Chairman Bostic believes that interest rates may be cut once this year, he said that the current interest rate is "slightly tightened" and economic data needs to be carefully evaluated.
Feder officials intensively send hawkish signals
On the eve of the Jackson Hall Global Central Bank Annual Meeting, Fed officials collectively "release the hawks". Hamak pointed out that "there is no sign of an economic recession, and the impact of tariffs will be fully revealed next year." Bostic emphasized that "policies need to be one-way to maintain market confidence." The market interprets it as the Federal Reserve trying to guide expectations and reduce the risk of volatility that Powell's speech may cause. The dollar index was boosted by this, rising 0.3% to 98.6589 on the day, hitting a new high in the past two weeks.
Badfast factors:
Hidden worries in the labor market emerged
The number of initial unemployment claims in the United States increased to 238,000 in the week of August 17, a three-month high, indicating that the employment market was marginally weak. Although the unemployment rate remains at a low of 3.7%, slower wage growth may dampen consumer spending.It may drag down economic growth in the long run.
Bearning factors:
The European Central Bank kept interest rates unchanged, and policy space was limited
On July 26, the European Central Bank announced that it would remain unchanged (deposit interest rate 2.0%, and the main refinancing interest rate 2.15%), and hinted that there was no further easing plan in the short term. Although the euro zone's lwcgm.cnprehensive PMI rebounded to 51.0 in July, the manufacturing PMI is still below the boom and bust line, and the momentum for economic recovery is insufficient. The threat of the United States imposing 15% tariffs on the EU continues to ferment, involving key areas such as automobiles and chips, which may weaken the euro zone's export lwcgm.cnpetitiveness.
Geopolitical risk spillover effect
The escalation of the Russian-Ukrainian conflict has led to an increase in uncertainty in Europe's energy supply. Russia launched a large-scale air strike on the border between Ukraine and the EU on Thursday, while Ukraine attacked Russian oil refineries, raising concerns about disruptions in energy transport. The eurozone has a high dependence on energy imports, and if the conflict continues, it may push up inflation and curb economic growth.
Favoritative factors:
Marginal improvement in trade data
The eurozone trade deficit narrowed to 4.7 billion euros in June, mainly due to the decline in energy prices and the growth of German machinery exports. If subsequent data continue to improve, market concerns about the eurozone recession may ease.
Favorites:
The signing of the UK-New Free Trade Agreement boosts market confidence
The UK and New Zealand reached a free trade agreement on August 22, 97% of goods will be exempted from tariffs, and the long-term trade volume is expected to increase by 25.5 billion pounds. The agreement covers agricultural products, automobiles and technology products, providing new channels for British lwcgm.cnpanies to enter the Asia-Pacific market. The pound rose 0.2% against the US dollar on the day to 1.2650, a week-long high.
Domestic consumption resilience showed
UK retail sales increased by 0.8% month-on-month in July, exceeding expectations of 0.3%, indicating that consumers' confidence in the economic outlook rebounded. The service industry PMI has been above the boom-bust line for three consecutive months, supporting the pound exchange rate.
Badministrative factors:
Structural contradictions are not resolved after Brexit
The British Farmers Federation warned that the cancellation of agricultural products on New Zealand may impact local agriculture and exacerbate labor shortage. In addition, the negotiations on trade arrangements in Northern Ireland are at a deadlock, the EU threatens to restart the dispute settlement mechanism, and political uncertainty suppresses the upward space of the pound.
Bond of negative factors:
The Bank of Japan maintains looseness, and the pressure on the depreciation of the yen intensifies
The Bank of Japan decided to keep interest rates unchanged by 0.5% on June 17 and slow down the balance sheet shrinking process, emphasizing that "inflation expectations have not stabilized to reach the 2% target." Although the August 1 meeting acknowledged strong inflation, the market still expects interest rate hikes to be postponed to October. Japanese Yen to US dollarThe depreciation depreciated by 0.3% to 145.20 on the same day, approaching the Japanese government's intervention warning line.
Geographical conflicts impact export-oriented economy
Tenuous situation in the Middle East has caused fluctuations in energy prices. As a major energy importer, Japan's trade deficit may further expand. In addition, the escalation of US restrictions on semiconductor exports has affected the stability of the supply chain of Japanese electronic lwcgm.cnpanies.
Positive factors:
The recovery of tourism industry boosted domestic demand
The number of inbound tourists in Japan increased by 120% year-on-year in July, with consumption reaching 2.1 trillion yen, pushing the service industry PMI to 52.3, a record high in the past two years. If the summer tourism peak season continues to exceed expectations, the pressure on the depreciation of the yen may be alleviated.
Favorites:
China-Australia trade recovery supports export data
Australia's rapeseed exports to China increased by 42% year-on-year in July, with the new quarter order price below US$600/ton, and the market share further expanded. Iron ore prices stabilized and rebounded to US$120 per ton, boosting the attractiveness of Australian dollar assets.
The domestic employment market is stable
Australia's unemployment rate remained at a low of 3.7% in July, and the number of full-time employment increased by 42,000, indicating the resilience of the economic fundamentals. The market's probability of the RBA raising interest rates by 25 basis points in September rose to 60%.
Badministrative factors:
The global economic slowdown suppressed lwcgm.cnmodity demand
China's industrial added value increased by 4.5% year-on-year in July, lower than expected 5.0%, raising concerns about the prospect of iron ore demand. If global manufacturing continues to be weak, the Australian dollar may face pressure to pull back.
Feder Chairman Powell's speech (22:00 Beijing time)
The market closely monitors his statement on the path of interest rate cuts in September. If the hawkish signal is released, it may further push up the US dollar and suppress risky currencies.
The conflict between Russia and Ukraine escalates
Russia and Ukraine accus each other of delaying the peace process. If sanctions are increased or energy transportation is interrupted, it may trigger a warming market risk aversion sentiment.
Bank of Japan's policy shifts to expectations
Barclays and other institutions predict that interest rate hikes may be raised in October, and they need to be vigilant about the impact of policy expectations changes on the yen exchange rate.
USD: Go long on dips, pay attention to the breakthrough in the range of 98.50-99.00.
Euro: Rebound short selling, resistance at 1.0950, support at 1.0800.
GBP: Range operation, 1.2600-1.2700 sell high and buy low.
Yen: Mainly wait and see, and you need to be vigilant in the range of 145.00-146.00.
Australia: Retracement is long, support is 0.6650, target is 0.6750.
Risk warning: geopolitical events, central bank policy statements and economicsFluctuations in economic data may lead to severe market fluctuations, and it is recommended to strictly stop loss and stop profit.
The above content is all about "【XM Foreign Exchange Market Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully lwcgm.cnpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: