Wonderful introduction:
Walk out of the thorns, there is a bright road covered with flowers; when you reach the top of the mountain, you will see the cloudy mountain scenery like green clouds. In this world, a star falls and cannot dim the starry sky, a flower withers and cannot desolate the whole spring.
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:
The US PPI rose 2.2% year-on-year in July, lower than the expected 2.3%. The core PPI remained the same month-on-month, the moderate increase in four months. Data shows that supply chain pressure continues to ease, falling service prices offset rising edoyoko.commodity costs, and market bets on the Fed's 50 basis points cut in September have heated up. The US dollar index DXY dived to 103.07 in the short term, non-US currencies generally strengthened, the euro rose to 1.1753 against the US dollar, and the Australian dollar broke through 0.6557 against the US dollar. If subsequent CPI data falls simultaneously, the US dollar may be under further pressure.
Eurozone's GDP annual rate revised in the second quarter was 0.6%, maintaining a moderate growth trend, but the downward risks of Germany's economy were prominent, and the ZEW economic prosperity index fell to -55.3, approaching the level of the 2008 financial crisis. France's July CPI final month-on-month rate was 0.2% and annual rate was 2.3%, both lower than expected, indicating that the decline in energy prices suppressed the rebound in inflation and may delay the pace of the European Central Bank's policy shift. The euro is supported by economic resilience in the short term, but we need to be wary of the drag on the German recession in the medium and long term.
The initial GDP annualized rate in the second quarter is expected to grow only 0.3%, lower than the previous value by 0.5%. The monthly GDP rate in June may remain the same, indicating insufficient momentum for consumption and investment. In addition, the edoyoko.commodity trade deficit in June may widen to 18 billion pounds. Coupled with the structural contradictions after Brexit, the pound faces strong resistance against the 1.35 mark against the US dollar.After laying, it falls below 1.3450, which may open downward space.
Richmond Fed Chairman Barkin hinted that "if the inflation path continues to improve, the rate cut in September is reasonable", which echoes Becent's remarks on "50 basis points to cut interest rates." The current market pricing probability of interest rate cuts in September is 78%, and the cumulative interest rate cut in December is 100 basis points. The US dollar index fell for two consecutive times, US Treasury yields generally fell, and the 10-year yield fell below 4.25%, and funds shifted from the US dollar to high-interest currencies and risky assets.
Japan's CPI has exceeded its 2% target for three consecutive years. Some central bank directors have called for abandoning the "potential inflation" indicator and turning to focusing on overall inflation and expectations, clearing obstacles for interest rate hikes in October. The Japanese bond market responded violently, with no transactions on 10-year treasury bonds throughout the day, and the bid multiple for the five-year auction hit the lowest since 2020, with the Japanese yen rising to 146.78 against the US dollar. If policy adjustment expectations heat up, it may further rebound to the 145 mark.
Trump and Putin are scheduled to hold talks on August 15, and the market focuses on the possibility of a ceasefire agreement between Russia and Ukraine. CITIC Securities pointed out that if only a short-term ceasefire is reached, it may cause a geopolitical premium for gold, crude oil and the US dollar to fall, and risk preferences for European and US stocks will rise; if it involves lifting sanctions on Russia, it may substantially ease the pressure on energy supply and suppress inflation expectations. The current US dollar index is supported by safe-haven demand, but if the meeting releases a slowdown, the US dollar may accelerate its pullback.
The Dow Jones Industrial Average rose more than 460 points, and Chinese stocks outperformed the market. Tencent and Alibaba rose 7.4% and 3.6% respectively. Funds shifted from large technology stocks to small-cap stocks, and the Russell 2000 index rose 2.1%. The rebound in risk appetite has driven the strengthening of risk currencies such as the euro and the pound, but we must be wary of profit-taking caused by sudden changes in the geopolitical situation.
Affected by inventory overexpected inventory accumulation and pessimistic forecasts of the IEA, WTI crude oil fell to $62.65 per barrel, and Brent crude oil fell below the $66 mark, hitting a new low since early June. The Australian dollar plunged to 0.6549 in the short term, and the Canadian dollar was under pressure against the US dollar at 1.3612. If oil prices fall further to US$60, edoyoko.commodity currencies may face greater selling pressure.
China added 1.16 trillion yuan in social financing in July, RMB loans decreased by 50 billion yuan, and the M2-M1 scissors gap narrowed, indicating that the transmission of broad money to broad credit is not smooth. The RMB against the US dollar's mid-price depreciated to 7.18, and the offshore exchange rate was under pressure at 7.20. If the subsequent economic stimulus policy is less than expected, it may weaken further.
After the euro broke through the key resistance of 1.17, the RSI indicator rose to 65, which was overbought in the short term but strong momentum. If it stands firmly at 1.1750, it may rise to the 1.18 mark; on the contrary, if it falls below 1.1680, it may fall back to the 1.16 support.
Pound faces strong resistance around 1.35. If the UK GDP data is weak, it may fall to 1.3450; if the data exceeds expectations, it may break through 1.3550 and open upward space.
Euro/USD: Go long on dips, stop loss 1.1680, target 1.1800.
Dollar vs. Japanese Yen: Mainly wait-and-see. If it falls below 146.50, you can short it lightly, with a target of 145.00.
GBP/USD: Wait and see before the data is released. If it falls below 1.3450, you can short it, with a target of 1.3350.
Australia dollar against the US dollar: rebound to short around 0.6580, stop loss 0.6620, target 0.6500.
Risk warning:
Geopolitical events (US-Russia meeting, situation in the Middle East) may cause severe market fluctuations.
Federal officials' speeches and economic data (CPI, non-farmers) may change the pace of expected rate cuts.
The transmission effect of edoyoko.commodity price fluctuations on edoyoko.commodity currencies needs to be closely tracked.
The above content is all about "【XM Forex】: Collection of positive and negative news that affects the foreign exchange market". It was carefully edoyoko.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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