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A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange】: 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. Economic data and policy trends
(I) UK inflation boosted the pound beyond expectations
Data from the UK National Office for Statistics showed that CPI rose 3.8% year-on-year in July, significantly higher than market expectations 3.4%, hitting a 18-month high. Rising air fares, hotel and car fuel prices are the main driving forces. This data strengthens the market's expectations that the Bank of England will postpone interest rate cuts. Currently, the market believes that the probability of interest rate cuts in November is only one-third, and the probability of interest rate cuts will drop to 50% before the end of the year. The pound sterling exchange rate against the US dollar rose in the short term, and investors need to pay attention to the linkage effect of subsequent salary data and central bank policies.
(II) Japan's weak exports dragged down the yen
The Japanese Ministry of Finance announced that exports in July fell 10.1% year-on-year, the largest decline in four years, among which exports to the United States fell 28.4% and 17.4% respectively, and exports of semiconductor manufacturing equipment fell 31.3%. The weak exports have exacerbated market concerns about the Japanese economy falling into recession. Core CPI in July fell 3.3% year-on-year, and the endogenous support of the yen was further weakened. The dollar-JPY exchange rate fluctuated around 147.25, and the technical side showed that short positions were dominant.
(III) The warming of U.S. inflation expectations disturb the US dollar
Minutes of the Federal Reserve meeting show that officials have intensified differences on the upward risks of inflation caused by tariffs, and some officials are worried that inflation expectations may be out of control. Despite the downward revision of non-farm data in July, the M2 money supply returned to its peak level, and market concerns about the "second wave of inflation" have heated up. The US dollar index fluctuates around 98.168, with short-term resistance at 98.788, support level 97.651. Investors need to pay close attention to the policy signals sent by Powell's speech at the Jackson Hall Central Bank Annual Meeting.
2. Geopolitics and market sentiment
(I) The progress of negotiations between Russia and Ukraine eases risk preferences
Trump promotes the Russian-Ukraine leaders' meeting. Russia expressed support for the delegation to continue direct negotiations, but emphasized that the summit will not be held until the territorial issues are resolved. A ceasefire agreement could boost the euro and pound if it reaches its end of August. Currently, the euro is fluctuating around 1.1648, and the technical side is in a converging triangle shape, breaking through 1.1680 may open upward space.
(II) The escalation of conflict in the Middle East pushes up the premium on crude oil risk
Israel launches a large-scale air strike on the Gaza Strip, and the Houthi forces launch hypersonic missiles at Tel Aviv, and the heating of geopolitical risks pushes up crude oil prices. Brent crude oil futures broke through $75 per barrel, which may affect the Canadian dollar and Australian dollar through trade accounts. Technical aspects show that the Australian dollar fluctuates and falls against the US dollar around 0.6443. If it falls below 0.6400, it may further fall to 0.6350.
(III) Fed policy differences in aggravate market volatility
Minutes of the Federal Reserve meeting showed that two officials advocated a 25 basis point interest rate cut to prevent worsening employment, but most officials believe that inflation risks are higher. Market expectations for a rate cut in September have cooled down, and the US dollar is under pressure in the short term but is supported by inflation sticky in the medium term. Investors need to pay attention to the EIA inventory data at 22:30 and the speeches of Federal Reserve officials in the early morning of the next day.
3. Central Bank policy and market expectations
(I) The ECB maintains a wait-and-see position
Minutes of the ECB July meeting show that officials are still concerned about the outlook for inflation, but have not clarified the policy path for September. Retail sales in the euro zone were weak in June, manufacturing PMI continued to shrink, and weak economic data may limit the upside. The technical side shows that the euro-USD resistance is 1.1680 and the support is 1.1629.
(II) The Australian job market turned to balance
Australia's unemployment rate rose to 4.3% in July, and the weak employment growth reflected the slowdown. The RBA may delay interest rate hikes, with the Australian dollar under short-term pressure. The technical side shows that the Australian dollar against the US dollar resistance is 0.6457 and the support is 0.6423.
(III) China's policy supports stabilization of the RMB
China's core CPI rose 3.1% year-on-year in July, and the recovery of consumption supports the basic economic situation. The central bank emphasized expanding the cross-border use of the RMB to prevent financial risks, and the RMB exchange rate fluctuated around 7.1831. Investors need to pay attention to the LPR quotation and real estate policy adjustments in August.
4. Technical and trading strategies
(I) US dollar index: Oscillation and accumulation of momentum
The US dollar index fluctuates between 97.651-98.788, and the shrinking of the MACD red column shows that the bull momentum is weakened. If you break through 98.788, you can catch up with long positions with a light position and the goal is99.00; if it falls back to around 97.651, try long, stop loss of 97.40.
(II) Euro vs. USD: Breakthrough is imminent
Euro vs. USD converges in the range of 1.1629-1.1680. If it breaks through 1.1680, you can chase long, and the target is 1.1720. If it falls back to around 1.1629, you can try long with a light position and stop loss of 1.1610.
(III) British Pound vs. USD: Short positions continue
The pound shows a short trend against the USD, rebounding to the range of 1.3500-1.3520, and you can try short, stop loss 1.3550, and target 1.3420; if it falls below 1.3420, you can chase short to 1.3364.
(IV) USD vs. Japanese Yen: Bearish signal
The USD vs. Japanese Yen falls below the lower track of the rising triangle and rebounds to the range of 147.50-147.80, and can try short, stop loss at 148.00, and target at 146.82; if it falls below 146.40, you can chase short to 145.45.
(V) Australian dollar against the US dollar: fluctuating downward
Australia dollar against the US dollar fluctuates between 0.6400-0.6457, rebounding to 0.6450-0.6470, you can try short, stop loss 0.6490, and target 0.6400; if it falls below 0.6400, you can chase short to 0.6350.
5. Risk warning
Geopolitics: Russia-Ukrainian negotiations and Middle East conflicts may trigger abnormal changes in safe-haven assets.
Policy risks: There is an expected difference in the minutes of the Federal Reserve meeting and the Bank of England policy path.
Data risks: US CPI and non-agricultural data may affect the market beyond expectations.
Investors are advised to strictly stop losses, control positions, and closely track the evening EIA inventory data and the speeches of Federal Reserve officials in the early morning of the next day.
The above content is all about "【XM Forex】: Collection of positive and negative news that affects the foreign exchange market". It was carefully xmniubi.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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