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A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Market Analysis】: Highlights of positive and negative news that affect the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
1. Core economic data and policy trends
U.S. non-farm employment data exceeded expectations
In June, the United States added 147,000 non-farm employment, far exceeding the expected 106,000, and the unemployment rate dropped to 4.1%. Although hourly wage growth rate fell to 0.2% month-on-month, the resilience of the job market has strengthened the Fed's position to maintain high interest rates. After the data was released, the market's expectations for a rate cut in July almost returned to zero, the US dollar index strengthened in the short term, and non-US currencies were under pressure. It is worth noting that the surge in employment in government departments by 66,000 people has become the main contribution, and the performance of the private sector is weak. This structural contradiction may restrict the long-term upward space of the US dollar.
China-US tariff policies have entered a critical observation period
The 90-day tariff "suspended period" of China-US tariffs will expire on July 9, and Trump has issued a tax increase letter to global trading partners in advance. If the tax increase eventually expands, it may intensify the pressure on global supply chain costs and push up risk aversion. However, China's special treatment was not included in the list, which may ease market concerns about the escalation of direct trade conflict between China and the United States. We need to pay close attention to the implementation details of the policy on July 9. If the tariff impact exceeds expectations, the US dollar's safe-haven attributes may further highlight, and emerging market currencies will face selling pressure.
The global manufacturing PMI rebounded for two consecutive months
The global manufacturing PMI rose to 49.5% in June, up month-on-month for two consecutive months, but is still in the contraction range. By region, the Asian manufacturing PMI remained above 50%, becoming a global economic stabilizer; the European manufacturing PMI rose slightly to 48.8%, but it has not yet escaped the crisis of contraction; the American manufacturing PMI rebounded slightly to 48.6%, but the recovery is weak. This pattern strengthens the logic of "Asian currencies are relatively strong and European currencies are under pressure", and the euro may continue to test the support of the 1.08-1.09 range against the US dollar.
2. Geopolitical and risk events
The situation in the Middle East is tense again
The Houthi armed forces claimed to use hypersonic missiles to attack Tel Aviv airport in Israel, and Israel sent a delegation to Qatar to restart the ceasefire negotiations in Gaza. The warming of geopolitical risks has driven demand for safe-haven assets, and traditional safe-haven currencies such as the Japanese yen and Swiss franc have been supported. If the conflict escalates further, gold and the US dollar may strengthen simultaneously, while risky currencies such as the Australian dollar and New Zealand dollar will face pressure to pull back.
The Russian-Ukrainian conflict continues to ferment
Ukraine attacks Borisogrebsk Airport in Voronezh Prefecture, Russia. Russia strengthens air defense deployment and shoots down 120 Ukrainian drones. The risk of conflict spillovers may exacerbate uncertainty in Europe's energy supply and drag down the eurozone economic expectations. In addition, the death of the vice president of the Russian Oil Pipeline Transport www.xmtraders.company has caused market concerns about the stability of the energy supply chain, and oil price fluctuations may indirectly affect www.xmtraders.commodity currencies such as the Canadian dollar and Norwegian kroner.
China implements reciprocal measures for EU medical device procurement
The Ministry of Finance stipulates that government procurement projects with a total of more than 45 million yuan exclude EU www.xmtraders.companies, and EU products shall not account for more than 50% of non-EU enterprise projects. The move aims to counter the EU's previous restrictions on Chinese medical devices, which may weaken the eurozone's export-oriented economy and intensify short-term fluctuations in the euro. The euro-renminbi exchange rate has depreciated slightly, and we need to pay attention to the transmission effect of subsequent trade frictions on the euro zone manufacturing PMI.
3. Central Bank Policy and Market Expectations
The Federal Reserve maintains a wait-and-see position
Powell said at the Sintra meeting that tariff policies have led to the Federal Reserve postponing interest rate cuts, and it is necessary to wait and see the evolution of economic data. The market's expectations for the rate cut this year have been lowered from 75BP to 50BP, and the federal funds rate futures show that the probability of no interest rate cut in July has risen to 95.3%. The dollar index is supported by this, but the long-term upside is subject to widening fiscal deficits (Trump signs a $4.1 trillion bill to exacerbate debt pressure) and weak manufacturing (ISM manufacturing PMI in June is only 49%).
The ECB's interest rate cut expectations have heated up
The ECB maintains its main refinancing rate by 2.15%, but the market expects the rate cut to reach 150BP in the next 12 months, significantly higher than the Fed's 85BP. Eurozone inflation fell to 2% in June, and weak economic data (manufacturing PMI is below 49% for six consecutive months) strengthened expectations of easing. The euro may fall to the 1.08 mark against the US dollar, and if it falls below this level, it may open up further downward space.
Policy Differences in Asian Central Bank
The RBA will announce its interest rate decision on July 8, with market expectations remaining unchanged at 3.85%, but may send dovish signals to cope with the domestic economic slowdown. Australian dollar against the US dollar has recently suffered from iron ore pricesRebound support is supported, but we need to be vigilant about the pullback risks brought about by policy shifts to expectations. The Bank of Japan maintains the 0.5% interest rate unchanged, but reduces its bond purchase plan and the yen exchange rate fluctuations may intensify.
4. Technical analysis and key points
Dollar Index
Daily level, the US dollar index broke through the 103.50 resistance after non-agricultural data, and the short-term upward target pointed to the 104.20-104.50 range. If you stand firm in this area, you may open up further upside potential; the lower support is at 103.00-103.20. We need to pay attention to the linkage effect of US Treasury yields and US stock trends. If US stocks pull back, it may suppress US dollar safe-haven demand.
Euro/USD
Euro/USD failed to effectively break through the 1.10 mark and is currently operating in the 1.0850-1.0950 range. Technical indicators show that RSI is close to the oversold area. If it falls below 1.0850, it may trigger the stop loss market. Look below 1.0800-1.0780. The upper resistance is still 1.0950, and economic data or policy signals are required to catalyze a breakthrough.
GBP
GBP
GBP versus the dollar fluctuated around 1.3650, supported by a rebound in UK inflation (the CPI may rebound to 3.4% in June) and hawkish central bank expectations. If the resistance exceeds 1.3700, it may be tested 1.3750-1.3800; the support below is at 1.3600, and we need to pay attention to the subsequent impact of Brexit and the international trade situation.
Australia dollar against the US dollar
Australia dollar against the US dollar has been boosted by a rebound in www.xmtraders.commodity prices recently, and the daily level has stabilized at 0.6700. If the resistance exceeds 0.6750, it may rise to 0.6800; the support below is 0.6650, so you need to be wary of the Australian Federal Reserve's policy turning towards expectations.
5. Operational strategies and risk warnings
Main currency pair strategies
U.S. dollar against yen: The warming of geopolitical risks promotes risk aversion demand, and you can go long on lows, with a target of 142.00-142.50, and a stop loss of 140.50.
Euro/USD: rebound short, target 1.0800-1.0780, stop loss 1.0950.
GBP/USD: range operation, sell high and buy low at 1.3600-1.3700, stop loss at 30 points each.
Australia dollar against the US dollar: wait and see, wait for the 0.6750 breakthrough signal. Aggressors can try long with light positions and stop loss of 0.6680.
Risk Warning
Data and Events: Pay attention to the RBA resolution on July 8, the minutes of the Federal Reserve meeting on July 9, and the implementation of Sino-US tariff policies.
Position management: Geopolitical and policy uncertainty are high. It is recommended to control the position within 20%, and stop loss is strictly set.
Technical breakdown: If the US dollar index effectively breaks through 104.50 or the euro falls below 1.0780 against the US dollar, it may trigger a trend and the strategy needs to be adjusted in time.
Summary: Outside this weekThe long and short factors in the foreign exchange market are intertwined, and US employment data and tariff policies have become the core variables that dominate the trend of the US dollar. Geographical risks provide support for safe-haven currencies, while European currencies are suppressed by expectations of economic weakness and easing. Investors need to pay close attention to key data and events, adjust positions flexibly, and avoid excessive leverage operations.
The above content is all about "【XM Foreign Exchange Market Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully www.xmtraders.compiled 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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