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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Forex]: a collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
On January 16, 2026, the foreign exchange market faced multiple news disturbances. Factors such as global central bank policy differentiation, cooling of geopolitical risks, and varying strengths of economic data jointly dominated market sentiment. The following is a summary of the core news that affects the trend of major currency pairs from two dimensions: good and bad, to provide reference for day trading.
1. Summary of good news
1. The People’s Bank of China released a easing signal and the attractiveness of RMB assets increased. On January 15, Zou Lan, deputy governor of the People's Bank of China, made it clear that there is still room for RRR cuts this year. The current average statutory deposit reserve ratio for financial institutions is 6.3%, and there is ample room for RRR cuts. At the same time, the central bank announced that it will lower the re-lending and re-discount rates by 0.25 percentage points starting from January 19, add 500 billion yuan in new re-loans to support agriculture and small businesses, and set up a 1 trillion yuan re-loan quota for private enterprises. A series of policy "combinations" will help economic transformation and optimization. In addition, the Ministry of Finance extended the preferential tax policy for foreign institutions to invest in the domestic bond market until the end of 2027, which significantly enhanced the attractiveness of RMB assets. The onshore RMB closed at 6.9698 against the U.S. dollar overnight, hitting a recent high, and the overnight session strengthened further.
2. U.S. economic data are improving, and the rebound in U.S. stocks has boosted risk appetite. The number of people filing for unemployment benefits in the United States fell to 198,000 last week, a new low since November last year, and the four-week average hit a two-year low, showing the strong resilience of the labor market; the outlook for manufacturing in New York and Philadelphia was better than expected, reinforcing expectations for solid economic growth. Supported by this, U.S. stocks rebounded after two consecutive days of decline on Thursday, with the Dow Jones Industrial Average rising 0.60% and the Nasdaq www.xmtraders.composite rising 0.25%. Chip and banking stocks led the gains, and rising risk appetite suppressed safe-haven buying in the safe-haven currencies of the U.S. dollar and Japanese yen.
3.Geopolitical risks in the Middle East have cooled, and risk aversion has subsided, which is good for risky currencies. Trump's latest statement made it clear that "there are currently no plans to launch a military strike against Iran", which is in sharp contrast to his previous tough stance. Iran has also shown its willingness for diplomatic negotiations, and the market's concerns about the situation in the Middle East have been significantly alleviated. The shipping situation in the Red Sea has improved simultaneously. Many shipping www.xmtraders.companies have resumed Red Sea routes. The risk of transportation interruption has been reduced. Hedging funds have gradually withdrawn. Risk currencies such as the euro and the pound have gained breathing space.
2. Summary of bad news
1. Federal Reserve officials collectively released hawkish signals and postponed interest rate cut expectations. Many Federal Reserve officials expressed their preference on the 15th to maintain interest rate stability at the January policy meeting. Kansas City Fed President Schmid reiterated his opposition to further interest rate cuts, emphasizing the need to maintain policy tightening to curb inflation; San Francisco Fed President Daly acknowledged that economic growth is solid, but pointed out that there are still uncertainties in improving inflation, and policy adjustments need to be cautious; Fed Governor Barr made it clear that the current policy stance is appropriate and can "wait and see." Market expectations for the Federal Reserve to cut interest rates before June have further cooled, providing support for the dollar.
2. The controversy over the independence of the Federal Reserve continues to ferment, and policy uncertainty has intensified. Federal Reserve Governor Barr said that the Trump administration's criminal investigation of the Federal Reserve and its attempt to remove governors were "attacks" on the central bank's independence. Powell has previously pointed out that the investigation is aimed at pressuring for interest rate cuts. This controversy continues to raise market concerns about the stability of U.S. monetary policy. With the White House revealing that Trump will confirm the candidate for the chairman of the Federal Reserve in the next few weeks, uncertainty about the direction of policy has increased the risk of dollar fluctuations.
3. The plunge in international oil prices has put pressure on www.xmtraders.commodity currencies. International oil prices plummeted by more than 4% on the 15th, with U.S. oil closing at US$59.19/barrel and Brent crude oil closing at US$63.76/barrel, the largest single-day drop since October 2025. The sharp drop in oil prices was mainly dragged down by the cooling of geopolitical risks and expectations of loose supply, which directly impacted the trend of www.xmtraders.commodity currencies such as the Canadian dollar and the Australian dollar. The Canadian dollar continued to fluctuate and weaken against the US dollar overnight.
3. Core impact and trading tips
Taken together, the core contradiction in the foreign exchange market that day was "the strengthening of the renminbi under China's loose policy" and "the resilience of the US dollar supported by the Federal Reserve's hawkish stance." In terms of operations, focus on three main lines: First, the RMB against the US dollar, short-term policy support is strong, but you need to be wary of the pullback caused by the Fed's hawkish signal, you can rely on the 6.96-6.98 range layout; second, the euro, pound and other European currencies, geo-risk cooling provides short-term support, but the policy divergence between the Federal Reserve and the European Central Bank limits the upside space, and it is recommended to trade mainly in the range; third, www.xmtraders.commodity currencies, the plunge in oil prices has suppressed the Canadian dollar and the Australian dollar, and it is necessary to wait for stabilization signals. In addition, it is necessary to pay close attention to relevant statements from the World Economic Forum in Davos and subsequent U.S. economic data, and strictly control positions to cope with market uncertainty.
The above content is all about "[XM Foreign Exchange]: Collection of good and bad news affecting the foreign exchange market", which was carefully www.xmtraders.compiled by the editor of XM Foreign ExchangeEditor, I hope it will be helpful to your trading! Thanks for the support!
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