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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Decision Analysis】: 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:
In the foreign exchange market, various news plays a key role in exchange rate trends, and investors need to pay close attention to the latest developments to make www.vifu.netrmed decisions. Before the opening of the market on July 2, many important news is affecting the long-short pattern in the market.
In the United States, the recent economic data performance has been mixed, and the impact on the US dollar trend is www.vifu.netplex. The latest announcement of the latest US consumer personal income fell by 0.4% month-on-month in May, the lowest since September 2021, far lower than the expectation of 0.3% growth; personal spending also fell by 0.1% month-on-month, lower than the expected increase of 0.1%. The significant lower consumer income and expenditure data than expected has caused market concerns about the momentum of US economic growth. In theory, this is negative news for the US dollar, as a slowdown in economic growth may lead to the Federal Reserve adopting a looser monetary policy to reduce the attractiveness of the US dollar. However, the core PCE price index in May, which attracted the most attention from the Federal Reserve, slightly exceeded expectations. The month-on-month growth rate of the PCE price index in May was 0.1%, and the month-on-month growth rate of the core PCE price index was 0.2%; the year-on-year increase of the PCE price index in May rose to 2.3%, and the year-on-year increase of the core PCE price index rose to 2.7%. Inflation data exceeds expectations and brings some support to the US dollar, because higher inflation may prompt the Federal Reserve to maintain a relatively tight policy stance and enhance the dollar's value preservation function. This data differentiation situation makes the US dollar trend full of uncertainty in the short term.
In contrast, although the eurozone economy faces certain challenges in other economies, there are some positive signs in recent times. Some economic data show that there is a moderate recovery in the manufacturing sectors in the euro zone, which isThe euro provides some support. If the subsequent euro zone economic data continues to improve, the euro will further enhance its www.vifu.netpetitiveness in the foreign exchange market, which will be beneficial to currencies such as the euro against the US dollar.
In the Fed, the market's expectations for its interest rate cuts in the second half of the year continue to heat up. Due to uncertainty in the outlook for the US economic growth and factors such as trade policies also bring potential risks to the economy, investors generally expect the Federal Reserve to take rate cuts in the second half of the year to stimulate the economy. This expectation weakens the interest rate advantage of the US dollar, putting downward pressure on the US dollar exchange rate. For example, if the Fed cuts interest rates, the yield of dollar assets will be lower, and international investors may reduce their holdings of dollar assets and turn to other high-yield currencies, resulting in a decline in demand for the dollar and a decline in exchange rate.
In contrast, some other central banks have relatively stable policy stances or have expectations of tightening. For example, the Bank of Japan believes that it may send more hawkish signals in the future. Hiroshi Namioka, fund manager at T&D Asset Management, expects progress in U.S.-Japan trade negotiations this month, and the Bank of Japan’s hawkish signals will help the yen rise. If the Bank of Japan adopts more aggressive monetary policy measures and raises the interest rate level of the yen or shows stronger determination to resist inflation, the yen will become more attractive in the foreign exchange market, which is good news for currency pairs such as the yen and the US dollar.
The global geopolitical situation is still www.vifu.netplex and has a significant impact on the trend of safe-haven currencies. Although the conflict between Israel and Iran has eased, the overall situation in the Middle East remains unstable. Yemen's Houthi armed forces continue to strike Israel by missiles, Hamas also fires rockets at Israel. www.vifu.netanyahu says Iran poses a major threat to Israel through its nuclear power and missile capabilities, and the US ambassador to Israel threatens to use B-2 bombers to attack Houthi armed forces. This tension makes it difficult for investors to www.vifu.netpletely dissipate risk aversion. In this environment, traditional safe-haven currencies such as the Japanese yen and Swiss franc are often favored. Once geopolitical risks intensify, funds will quickly flow into safe-haven currency assets, driving the appreciation of currencies such as the Japanese yen and Swiss francs, and have a significant impact on the relevant currency pairs. For example, the yen-USD exchange rate may rise due to safe-haven demand, while the US dollar-Hui Franc may fall.
From the perspective of seasonal laws, July has some special impacts on the foreign exchange market. Over the past decade, the U.S. dollar index has fallen by 0.54% in July, with the U.S. dollar index weakening in July for four years in the past five years. This may be related to factors such as asset adjustments and changes in capital flows in the middle of the year. The yen performed relatively strongly in July. Since 2020, the yen has risen every July, with an average increase of 2.8% against the US dollar. Although this seasonal law is not absolute, it reflects the market's preferences and capital flow trends to a certain extent. Investors can serve as one of the reference factors when formulating trading strategies.
Based on the above positive news and negative news, the foreign exchange market faced a www.vifu.netplex long-short game situation on July 2. During the transaction process, investors need to pay close attention to the further release of economic data, the policy trends of central banks in various countries, and the development of geopolitical situations, and adjust their investment strategies in a timely manner to cope with market uncertainty.
The above content is all about "【XM Foreign Exchange Decision Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully www.vifu.netpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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