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market analysis
The market is waiting for Powell's "Eagle Attack" annual meeting! Expectations of interest rate cuts are waning, and the dollar rebounds in trouble
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: The market is waiting for Powell's 'Eagle Attack' annual meeting! Expectations of interest rate cuts are ebbing, and the US dollar is in trouble to rebound." Hope it will be helpful to you! The original content is as follows:
Asian market market
On Wednesday, the US dollar index rose first and then fell, and once rose to the intraday high of 98.42, and then erased all intraday gains and turned to a decline. However, after the meeting minutes showed that only two Federal Reserve decision makers supported the interest rate cut in September, the US dollar index shranked its decline. As of now, the US dollar priced at 98.25.
Bill Poulter, a Trump camp official and director of the Federal Housing and Finance Bureau, called for an investigation into Fed director Cook on mortgage transactions, suggesting that he may violate the criminal law. Trump then called for Cook to resign, who responded that he would not resign because of bullying.
Minutes of the Federal Reserve's July meeting: Several participants said that the current interest rate is not far from the neutral level. The vast majority of officials believe that it is appropriate to hold on to the army.
The Israeli side decided not to respond to the ceasefire plan agreed to by Hamas for the time being.
The Israeli military plan to attack Gaza City was revealed to have been approved by the Defense Minister; the Israeli military spokesperson: It has entered the first phase of the planned attack on Gaza City. The suburbs of Gaza City have been controlled.
Medvedev, Vice Chairman of the Russian Federation Security Council: Russia does not accept NATO's so-called "peacekeeping force" stationed in Ukraine.
International organizations urge the United States to increase its efforts to crack down on illegal gold trade.
Summary of institutional views
Goldman Sachs: It is recommended to short the United States and Japan, with the target and stop loss at...
The market is against JapanThe central bank's expectations for interest rate hikes have heated up, and it is worried that its policies will lag behind the economic situation.
The US dollar/JPY trend lags behind the model/fundamental signals.
The yen is expected to become a more important and stable factor in driving the further depreciation of the US dollar in the next few months.
Our view of benchmark interest rates means that the US dollar index DXY has a further downside of about 4%; and the declining hedging costs should stimulate asset reconfiguration (especially in the European market) and participation in the Japanese market.
Even if the Federal Reserve cuts interest rates aside, investors will support diversifying/heating the US dollar due to concerns about the ongoing US institutional governance.
Trading idea: Continue to short USD/JPY, target price 142, and stop loss is set at 152.
Facefield Bank: Powell's last "showdown" at the central bank's annual meeting: After all, it's all an employment issue?
The theme of this year’s economic policy seminar was “Labor Markets in Transformation: Demographics, Productivity, and Macroeconomic Policy.” Given that the focus of the last Fed discussion was on the tight labor market, whether it was due to a decline in labor participation rates and overall labor growth or a slowdown in economic growth, it is predictable that this will become a topic of concern this week. The biggest question is whether we can see the Fed's future ideas from these discussions. We will wait and see what will be discussed at the seminar, but there is no doubt that the economic and political background makes this seminar particularly xmniubi.compelling. However, the final result was not revealed at this annual meeting, but after August data.
The biggest question is undoubtedly what will happen to the job market in the short term, not what will the price. If the jobs figures in August are not significantly better than in July, the market still hopes the Fed cuts interest rates by 50 basis points by the end of the year. I still tend to believe that the more price increases in the xmniubi.coming months, the greater the impact on the economy, and the Fed should pay more attention to the labor market. Of course, if they do, the dollar will become vulnerable, but the simplest conclusion is that we will overreact to any unexpected reactions in the data. Then we start thinking about what the Fed will look like after Powell abdicates. Will independent central bank governors targeting inflation be replaced by Milan like the heroes of the Wild West? And people like him, or can they live to another day against inflation?
Analyst Greg Michalowski: The US/Japan rebounded slightly after the minutes of the meeting, but the future path is still in mystery...
The minutes of the Fed meeting show that despite internal differences within the Fed, most people still believe that there is inflation risk. After the meeting minutes were announced, the US/Day rebounded slightly in the short term.
From the daily chart, the pair is still between the 100-day moving average below (145.44) and the 200-day moving average above (149.16). Price is currently in 2022The annual low to the 2024 high is below the 38.2% retracement level of the upward band, which is 148.678. The 50% midpoint is 144.581.
The prices have remained between these two extreme levels in the past few months, with an exception only the day before the July 31 U.S. Employment Report was released. On August 1, the price fell back to these two moving averages. Since then, prices have fluctuated up and down in violent fluctuations, and the market has fallen into a "difficult" and I don't know which direction to develop.
Bank of America Forecasting the Central Bank Annual Meeting: How will the US dollar perform during Powell's speech?
While we are still bearish on the dollar, we do expect some moderate gains in the near term before the Jackson Hall meeting. This is mainly because despite the strong inflation signal last week and there are few obvious signs that Powell will take enough dovish xmniubi.comments to verify market expectations, the market has almost xmniubi.completely digested the rate cut expectations in September. If his speech is indeed more balanced and the dollar rebounds on expectations of a pullback in September, we usually see this as a selling opportunity.
As the case for the whole year, the expected pricing of interest rate cuts at each meeting did not provide effective support to the US dollar. If the outcome of the Jackson Hall meeting is the same (which seems to be possible to some extent), the forex market may continue its forward-looking strategy. We think the dollar will be in trouble with the prospect of a final rate cut. Further downside risks stem from the post-Powell Fed system, which may have a risk of further interest rate cuts, even exceeding the extent that the current Fed implies.
The above content is all about "[XM official website]: The market is waiting for Powell's 'eagle attack' annual meeting! Expectations of interest rate cuts are ebbing, and the US dollar is in trouble" are carefully xmniubi.compiled and edited by the editor of XM Forex. I hope it will be helpful to your trading! Thanks for the support!
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