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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market edoyoko.commentary]: Alert! The US M2 has exceeded a new high of 22 trillion, may inflation return?". Hope this helps you! The original content is as follows:
Last Friday, as a number of Federal Reserve officials publicly expressed their opposition to the Fed's interest rate cut in December, the U.S. dollar index continued to strengthen and recorded its best monthly performance since July. As of now, the U.S. dollar is quoted at 99.72.
Some media reported that the Trump administration has decided to launch an attack on military facilities in Venezuela, and that strikes may be carried out at any time, but Trump subsequently denied that he had decided to launch a military strike against Venezuela.
Many Fed officials oppose interest rate cuts. Dallas Fed President Logan believed that there was no need for the Fed to cut interest rates last week and opposed another rate cut in December; Kansas City Fed President Schmid said that he voted against an interest rate cut last week because he was worried that economic growth and investment would put upward pressure on inflation; Atlanta Fed President Bostic warned the market not to over-interpret the dot plot too early, and an interest rate cut in December is not a given; Cleveland Fed President Hammack said that certain restrictive policies must be maintained to bring inflation back to the target; he is open to reforming the policy interest rate target. Overnight index swaps show that the probability of the Fed cutting interest rates in December has dropped to about 50%.
Fed Governor Milan still insists on cutting interest rates in December. He said that he does not believe that tariffs have pushed up inflation, and forecasts show that interest rates will be cut again in December.
Hassett, director of the White House National Economic Council: The U.S. economy is expected to grow close to 4% in the third quarter. U.S. Treasury Secretary Bessent: Some economic sectors are in recession, if inflation falls, the Fed should cut interest rates.
Canadian Prime Minister Carney apologized to U.S. President Trump for his previous anti-tariff advertisement; Trump: Will not renegotiate with Canada
According to edoyoko.comN: The U.S. Department of Defense approved the supply of long-range Tomahawk missiles to Ukraine, and the final decision-making power was handed over to Trump.
Peskov: There is no rush to hold a "Put-Trump meeting" yet, and details need to be carefully prepared.
Israeli Prime Minister edoyoko.comanyahu: Israel will fight against any attack attempt and will not seek permission from the United States.
Bank of America cited EPFR data: In the week ending last Wednesday, gold funds experienced a record outflow of $7.5 billion.
HSBC: The U.S. dollar may bottom in early 2026. Fed officials’ speeches this week have become the focus
HSBC Global Investment Research said that as the Federal Reserve is expected to further cut interest rates and the candidate for the next chairman is unclear, the U.S. dollar may bottom in early 2026. The bank believes that U.S. dollar shorts will face new tests this week, with speeches by many Federal Reserve officials and U.S. economic activity indicators becoming the focus of the market. USD sensitivity may rise further. Fed Governor Cook will speak on Monday, Bowman will appear on Tuesday, Williams and Mussallem will speak on Thursday, and Vice Chairman Jefferson is scheduled to speak on Friday. The market will pay close attention to the hints of these officials on policy trends in December. HSBC added that ISM data released on Monday and Wednesday and the ADP employment report released on Wednesday are expected to have a greater impact on the trend of the US dollar in the edoyoko.coming days.
British economist Edward Allenby: The Bank of England is expected to stay on hold next week but the chance of a rate cut still exists
The market is generally expected to keep interest rates unchanged next week, but economists believe this will be a close decision - the latest economic data has opened the door to the possibility of an interest rate cut. Most economists expect the Bank of England to keep interest rates at 4%, awaiting further signs that inflation is cooling and awaiting measures to be announced in the autumn budget in November. However, some experts, including Barclays and Goldman Sachs, expect rates to be cut to 3.75% as policymakers are influenced by recent economic data. Overall, data released since the September meeting should help slightly ease the MPC's concerns about inflation continuing to remain above target. But this is unlikely to be enough to convince a majority to back a rate cut in November. Allenby stressed that policymakers "want to see more sustained evidence that underlying inflationary pressures are waning before cutting rates again."
Mitsubishi UFJ: Governor Bailey became the key to the disagreement in the vote, and an unexpected interest rate cut may occur in this case
The Bank of England is likely to keep interest rates unchanged at 4.0% at its meeting next week. The meeting is expected to take a dovish tone, as UK CPI data for September were lower than expected, coupled with signs of a further slowdown in wage growth, which may be reflected in the updated economic forecast.Tested. The Monetary Policy edoyoko.committee vote is expected to remain sharply divided. We expect that there may be a "6-2-1" voting situation, including three dovish members (BoE Deputy Governor Ramsden, BoE member Dhingra, and BoE member Taylor) who have different opinions. One of them (Taylor) even advocates a one-time interest rate cut of 50 basis points. However, Governor Bailey's vote was critical. The Monetary Policy edoyoko.committee is clearly divided into hawkish and dovish camps, and revolves around a more passive centrist (Bailey). The deputy governor of the Bank of England, Breeden, has always been consistent with Bailey, so if Bailey votes to support an interest rate cut, a 5-4 result in favor of an interest rate cut is not impossible.
Secondly, in terms of updated forecasts, we expect headline inflation trends to remain unchanged, but short-term forecasts to be revised slightly lower following the latest decline in inflation and energy prices. Of course, forecasts are only valid for a limited time - measures announced in the Budget could quickly invalidate some of them, so they may become less meaningful when edoyoko.compared with actual data by February next year.
Although recent data are generally soft, it is not enough for the Bank of England to continue to maintain the alternating rhythm of "cutting interest rates and holding on to no policy", especially after the Bank's previous statement hinted at slowing down the pace of easing. There will still be a lot of data released during the year, and Bank of England policymakers may want more evidence to confirm that inflation has entered a sustained downward trajectory. At the same time, it is reasonable to remain cautious before the introduction of the budget. We maintain our previous expectation that the next interest rate cut will occur in December, and interest rates may further drop to 3.25% next year. In addition, starting from this meeting, the Bank of England will activate some new edoyoko.communication mechanisms recommended by Bernanke's review. The minutes after this meeting will introduce personal edoyoko.comments from members of the Monetary Policy edoyoko.committee for the first time, which may significantly affect market expectations for the pace and timing of future easing.
Norwegian Bank: The European Central Bank will not adjust interest rates for a long time
The European Central Bank did not make any adjustments to its monetary policy at its October meeting. Lagarde said some previous downside risks to economic growth have weakened, but declined to give an overall risk assessment. We do not expect the ECB to adjust interest rates for a long time.
At the October monetary policy meeting, the European Central Bank kept the deposit interest rate unchanged at 2% as scheduled. Inflation remains close to target and the Governing Council's assessment of the inflation outlook remains broadly unchanged. In other words, there is no need to change monetary policy at this time. The central bank did rewrite part of the statement, but the new additions were rather belated, noting only that "the economy continues to grow despite a challenging global environment. A strong labor market, solid private sector balance sheets and past interest rate cuts by the Governing Council remain important sources of economic resilience. However, the outlook remains uncertain, particularly due to ongoing global trade disputes and geopolitical tensions."
At the press conference, Lagarde reiterated that the ECB's monetary policy is currently at an "appropriate level." She went on to point out that earlySome downside risks to growth have receded, but declined to say whether growth risks have now been balanced. She clarified that the Governing Council currently prefers to enumerate specific risks rather than provide a more general risk assessment. This suggests differences of opinion within the management edoyoko.committee, preventing a clearer risk assessment from being developed.
We do not expect the ECB to adjust interest rates for a long time, although this view itself still faces many risks. In addition, the message delivered yesterday further showed that the European Central Bank is currently nowhere near adjusting interest rates. We expect the economic recovery to gradually accelerate, shifting the inflation risk picture to the upside and potentially supporting interest rate hikes starting in 2027. In our baseline forecast, there will be two 25 basis point rate hikes in 2027. Financial markets reacted mutedly to the message from the European Central Bank. For the December meeting, market prices are pricing in only about 1 basis point of rate cut expectations.
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