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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: A collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
On November 25, the foreign exchange market ushered in a period of intensive long and short news. Factors such as the divergence of economic data in the Eurozone, repeated Fed policy expectations, and geopolitical capital flows jointly intensified the volatility of non-U.S. currencies. The core fluctuation range of major currency pairs narrowed that day, with the U.S. dollar index maintaining a volatile range of 105.2-105.6, the euro against the U.S. dollar fluctuating around 1.150-1.154, and the pound and yen showing partial trends. The following is a summary of the core news and logical connections that affect the day's trading from the perspective of good and bad.
1. Good news: the supporting force of non-US currencies
1. The resilience of the euro zone service industry exceeded expectations: the preliminary value of the euro zone service industry PMI in November was 53.1, a slight rebound from 52.7 in October, and has been in the expansion range for four consecutive months. The German service industry PMI rose to 52.9, and the French service industry PMI remained at 53.5, showing that consumption and service industry demand support the economy. This data eased the market's concerns about the euro zone's economic recession and provided phased buying support for the euro. The euro rebounded to a high of 1.1538 against the U.S. dollar during the European trading session.
2. Japan’s policy of strengthening inflation stickiness turns to expectations: Japan’s core CPI rose by 3.0% year-on-year in October, higher than market expectations of 2.8%, and higher than the Bank of Japan’s 2% target for 12 consecutive months. Bank of Japan Governor Kazuo Ueda mentioned in his speech that day that "you need to be vigilant about the rising effect of the depreciation of the yen on inflation." The market's expectations for the Bank of Japan to withdraw from its easing policy in the spring of 2026 have increased, pushing the U.S. dollar down 0.72% against the yen that day, falling to the 156.30 line, becoming the leading gainer among non-U.S. currencies.
3. Hot sales of China’s euro sovereign bonds boost the yuan and the euro: China November 18The 4 billion euros of sovereign bonds issued were subscribed 25 times, and the rush for funds reflects the confidence of global capital in Chinese assets. On the 25th, the central parity rate of the onshore RMB against the U.S. dollar was reported at 7.2315, an increase of 128 basis points from the previous day. The strengthening of the RMB indirectly led to a rebound in xmniubi.commodity currencies. The Australian dollar rose by 0.25% to 0.6462 against the U.S. dollar on the same day.
2. Bad news: the core factor of suppressing non-US currencies
1. The Fed's hawkish rhetoric continues: Dallas Fed President Logan reiterated on the morning of the 25th that "the current interest rate level is not enough to quickly lower inflation" and clearly opposed an interest rate cut in December; Boston Fed President Collins proposed that "interest rate cuts must meet the strict conditions of inflation continuing to be below 2.5%." The CME Federal Reserve Watch Tool shows that the probability of keeping interest rates unchanged in December rose to 61%, an increase of 9 percentage points from the previous day. Supported by this, the U.S. dollar index held on to the 105 integer mark during the European trading session.
2. The Eurozone manufacturing recession intensified: Contrary to the service industry, the Eurozone manufacturing PMI preliminary value fell to 49.5 in November, a further decline from 49.7 in October. The German manufacturing PMI fell to 48.2, shrinking for eight consecutive months, and the Italian manufacturing PMI fell below the 48 mark. The continued weakness in the manufacturing industry highlights the structural imbalance of economic recovery and limits the euro's rebound space, causing the euro to fall back to around 1.1510 after rising higher.
3. Global risk aversion is on the rise: new variables have emerged in the geopolitical situation in the Middle East, the Red Sea shipping risk warning has been upgraded, and funds have temporarily flowed to safe-haven currencies such as the US dollar and Swiss franc. The Swiss franc rose 0.31% against the euro that day, and the U.S. dollar fell 0.28% against the Swiss franc. At the same time, U.S. stock futures opened down 0.4%, and the pressure on risky assets indirectly strengthened the safe-haven demand for the U.S. dollar.
3. Core tips for trading
The news of the day showed the characteristics of the game of "good for the service industry vs. bad for the manufacturing industry" and "anticipated shift in non-U.S. policy vs. hawkish by the Federal Reserve". Three major points need to be grasped in operation: First, the EURUSD focuses on 1.1490-1 The .1550 range breaks through, and before the breakthrough, range trading is the main one; second, the US dollar against the yen needs to be alert to the callback driven by policy expectations. If it falls below 156.00, it can be short-term; third, closely follow the US consumer confidence index in November in the evening. If the data is stronger than expected, it will further strengthen the strength of the US dollar. In addition, as Thanksgiving Day approaches, some markets are closed early, and you need to be wary of abnormal fluctuations caused by shrinking liquidity in late trading.
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