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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 www.xmtraders.comment】: 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:
1. US dollar currency: positive and negative negative factors, policy expectations become key variables
Friendly improvement in economic data: The US JOLTS job vacancy recorded 7.227 million in August, slightly exceeding the expected 7.2 million. The previous value was revised up from 7.181 million to 7.21 million, indicating that the labor market still remains resilience, strengthening the Fed's policy basis for "cautious interest rate cuts."
Stock market and bond market support: The three major U.S. stock indexes performed strongly in September, the S&P 500 hit the largest September increase in 15 years, and the Nasdaq rose for six consecutive months. Risk preferences heated up to attract foreign capital inflows, indirectly boosting demand for the US dollar; the 10-year U.S. Treasury yield stabilized at 4.1464%, and the spread advantage has not been significantly weakened.
Bold Factors
Dooms within the Federal Reserve are disturbed: New Director Stephen Miran called for a sharp drop in interest rates to 2.5% or lower. Although Wall Street questioned, it has aggravated market concerns about policy differences. The US dollar index fell to a low of 97.63 on October 1, and rose only slightly by 0.02% in the late trading.
After the risk of government shutdown: Although the suspension is avoided in the short term, the two parties have not reached a substantial consensus on budget differences. The market is worried that the negotiation deadlock may restart in mid-to-late October, and the allocation demand of safe-haven funds for the US dollar has become cautious.
2. European currency: Euro is under pressure to inflation, pound is waiting for data catalysis
Europe (EUR)
Dangerousness dominates: The euro zone's CPI year-on-year increase in September fell to 1.8%, lower than expected 2.0% and the previous value of 2.2%, hitting March 2024Since the latest low, market expectations for the ECB to release loose signals in October have heated up, and the euro/dollar surged to 1.1780 and then fell back to 1.1768.
Positive support: OECD raised global growth expectations to 2.9%, emphasizing that the eurozone economic resilience exceeded expectations, and Germany's industrial output is expected to rebound by 1.2% in the fourth quarter, providing a fundamental bottom for the euro and limiting the decline.
GBP (GBP)
Neutral bearish: The UK manufacturing PMI has been below the boom-bust line for six consecutive months, and industrial weakness suppresses the upward space of the pound; and the Bank of England's probability of maintaining interest rates in October is only 58%, and policy uncertainty intensifies wait-and-see sentiment.
Potential positive: The UK's GDP correction value in the second quarter is in line with expectations, and the service industry output exceeds expectations. If the September Nationwide housing price index released on October 2 exceeds expectations, it may temporarily boost the pound, pay attention to the breakthrough of the 1.3460 resistance level.
3. www.xmtraders.commodity currency: The Canadian dollar was hit by crude oil, and the Australian dollar was boosted by Chinese data
Canadian dollar (CAD)
Triple negative resonance: OPEC+ considers meeting on October 5 to accelerate production increase, and plans to increase production by about 500,000 barrels per month in the next three months. WTI crude oil plummeted 1.70% to US$62.37 per barrel on October 1, and the high correlation between the Canadian dollar and crude oil 0.8 puts it directly under pressure; the aftermath of the Bank of Canada's interest rate cut in September has not yet subsided, and the probability of another decline in October rose to 48%, and the interest rate spread between the two countries widened to more than 150 basis points.
Weak support: US EIA crude oil inventories fell by 7.257 million barrels, and Cushing's inventory dropped sharply by 3.028 million barrels, easing concerns about oversupply in the short term may narrow the decline in the Canadian dollar.
AUD (AUD)
High-favorable drive: China's official manufacturing PMI rose to 49.8 in September, recovering for the second consecutive month. The equipment manufacturing and high-tech manufacturing PMIs reached 51.9% and 51.6% respectively, indicating improvement in demand. The Australian dollar, as a trade-related currency in China, was supported, and the Australian dollar/USD stood firm at 0.6480.
Bad negative suppression: The plummeting crude oil has dragged down the overall sentiment of www.xmtraders.commodity currencies, and the RBA's easing expectations have not been www.xmtraders.completely eliminated, limiting the Australian dollar's rebound height, and the resistance level is seen at 0.6520.
4. Asian currencies: The RMB is supported by policy, and the yen is highly risk-averse attributes are highlighted. The positive factors are leading: China's manufacturing PMI improved in September, and corporate production and operation expectations rose to a high of nearly 6 months; and the new green finance policy has driven the expectation of 500 billion yuan in credit supply, strengthening confidence in economic recovery, and the US dollar/RMB fell to 7.1820, a two-week low.
Badministrative constraints: China-US interest rate spread is still at a high level, and the "swap" limit increase policy will take effect only on October 13, short-term foreign capital inflows are limited, and the rebound space of the RMB is suppressed.
JPY (JPY)
Bonus support: U.S. recession expectations are heating up (JPMorgan Chase predicts a probability of 60%), safe-haven funds flow to the Japanese yen, and the US dollar/Japanese yen fell slightly to 143.67 on October 1, and did not strengthen simultaneously with the US dollar index.
Bond negative suppression: The Bank of Japan's policy normalization pace is slow, and the market expects interest rate hikes in 2025 to be only 44bp, the interest rate spread with the Federal Reserve remains, and the yen's increase is limited.
5. Core logic of trading
The current foreign exchange market is dominated by the three factors of "policy difference + www.xmtraders.commodity price + data wave". The short trend of the US dollar/Canada dollar is clear, and short orders can be laid out whenever the rebound; the euro/US dollar, pound/US dollar are in a volatile pattern, and we need to wait for the CPI and employment data to break the balance; the RMB is relatively strong in the short term, and can hold US dollar/RMB short orders to see 7.1600. During the operation, we need to focus on the OPEC+ meeting and the forward-looking signals of the US non-agricultural data to prevent sudden changes in the market caused by the news.
The above content is all about "【XM Foreign Exchange Market Review】: Collection of positive and negative news that affects 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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