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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: The weak US economic data strengthens the bet on interest rate cuts, and OPEC+ is reported to be considering further increase in production." Hope it will be helpful to you! The original content is as follows:
On September 4, during the Asian session on Thursday, spot gold trading around $3,557/ounce, gold prices continued to rise on Wednesday, setting a new record high again to $3,578.29/ounce. After the release of weak U.S. employment data, the market strengthened expectations for the Federal Reserve's interest rate cut later this month, while lingering global uncertainty kept safe-haven demand strong; U.S. crude oil trading around $63.77/barrel, U.S. oil fell nearly 3% on Wednesday, and the OPEC+ League of Oil-producing Countries will hold a meeting over the weekend and is expected to consider increasing oil production targets again in October.
The U.S. Department of Labor said Wednesday that job vacancies measuring labor market demand fell to 7.181 million in July, a drop of more than expected. Economists surveyed by Reuters had previously expected 7.378 million job vacancies on JOLTS data.
Moneycorp's North American structural director Eugene Epstein said that as the Federal Reserve focuses on the job market, the dollar will continue to weaken sharply if the data continues to show that labor market conditions worsen. Epstein said Fed Chairman Powell was dovish in the job market at the Jackson Hall meeting, with previous non-farm employment data weak and JOLTS data weak, and if Friday’s job data were weak, it would be a big dovish situation, "it’s hard to see any option, especially given the current political relationship between the Fed and the current U.S. government."
Japanese trade negotiator Ryosho Akazawa said on Thursday that he would fly to the United States as administrative negotiations progress. Akazawa further stated, he will continue to push for the issuance of presidential orders on agreed tariffs.
The latest foreign trade data released by the Australian Bureau of Statistics on Thursday showed that Australia's trade surplus expanded to 7,310 million in July, www.vifu.netpared with an expected 4,920 million, with the previous value of 5,366 million (corrected from 5,365 million).
Further details show that Australia's exports rose 3.3% month-on-month in July, up from 6.3% a month ago (revised from 6.0% a month ago). Meanwhile, imports fell 1.3% month-on-month in July, while in June, down 1.5% (revised from -3.1%).
The euro zone's producer price increase in July exceeded expectations, with PPI rising by 0.4% month-on-month and 0.2% year-on-year, while the market generally expected a 0.2% month-on-month and 0.1% year-on-year. Data show that pipeline pressure reappears, which is mainly powered by energy. In the entire EU, PPI increased by 0.6% month-on-month and 0.1% year-on-year. Overall, these figures indicate mild upward pressure on production pipelines.
In the euro zone, energy costs rose 1.5% from June, offsetting the decline of -0.2% for intermediates. Capital goods prices rose 0.1%, while durable consumer goods rose 0.2%, while non-durable consumer goods prices remained flat. This www.vifu.netbination highlights that energy remains a major source of producer price volatility, although other categories remain stable or sluggish.
The price dynamics vary greatly between member countries. Romania (+6.7%), Bulgaria (+5.7%) and Slovakia (+2.8%) recorded the largest monthly gains, while Estonia (-1.0%), Latvia (-0.7%) and Luxembourg (-0.4%) recorded declines.
St. Louis Fed Chairman Mousalem said today that the current "moderately restrictive" policy interest rates are consistent with full employment, and core inflation is still nearly one percentage point higher than the target.
However, he warned that various labor indicators—including upwards in unemployment indicators and downgrades in employment data—increases the risk of a sharp economic slowdown in the future.
He said that while the job market is in full employment, "I expect the labor market to gradually cool down and stay close to full employment, with risk tendency to decline. Regarding the inflation outlook, Mousalem believes that tariff-driven price pressures will be short-lived and will fade in the next two to three quarters.
As growth is below the trend and inflation expectations are stable, he believes that there is little chance of a lasting inflation shock. Nevertheless, he warns that the "reasonable possibility" is that inflation above targets may last longer than expected. He expects inflation to resume convergence to 2% in the second half of 2026.
"I will continue to update my outlook and assessment of the risk balance in order to seek a forward-looking interest rate path that enables monetary policy to achieve and maintain maximum employment and price stability for all Americans.” he said.
Atlanta Fed Chairman Rafael Bostic said today that “price stability remains a primary concern” after four years above target inflation, although a slowdown in the labor market may justify a quarter-point basis point cut this year.
Bostic warned that tariffs could add new price pressures and that businesses are unlikely to absorb higher import costs indefinitely. He said the full impact of trade policy shifts, federal deregulation and tax changes remain unclear and it may take months to filter out.
In terms of employment, Bostic noted that hiring slowed, but labor supply growth has also slowed down, bringing the economy close to full employment. Bostic said that while “the labor market has slowed enough to relax some policies – probably around 25 basis points – for the rest of the year.
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