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Hello everyone, today XM Forex will bring you "[XM Official Website]: A collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
December’s foreign exchange market started with multiple variables. Swinging Federal Reserve policy expectations, divergent global economic data and rising geopolitical tensions all stirred up market sentiment. The following are the core positive and negative factors currently affecting the trend of major currencies for trading reference.
Positive factors: Disagreements within the Federal Reserve still exist, Chicago Fed President Goolsby and other hawks emphasize the risk of upward inflation, and Dallas Fed President Logan clearly opposes an interest rate cut in December, providing phased support for the U.S. dollar. In addition, the silence period before the December interest rate meeting is approaching, and Powell has limited space to express his position. The short-term market may enter a volatile consolidation in the news vacuum.
Negative factors: Dovish voices continue to ferment. New York Fed President Williams and Fed Governor Waller both support an interest rate cut in December. The market's expected probability of an interest rate cut has risen from 30% to 80%. The HSBC report pointed out that although the U.S. dollar index briefly exceeded 100, the Fed's "insurance interest rate cuts" and concerns about leadership changes will suppress the long-term trend of the U.S. dollar. The index has now fallen back to around 99.50.
Good for the Euro: EUR/USD has risen cumulatively last week and is now firmly below 1.1600. The market is waiting for the EU's November HICP inflation data on Tuesday. Inflation in the Eurozone fell to a nearly three-year low of 2.1% in October. If the data continues to fall, it will strengthen expectations for subsequent interest rate cuts by the European Central Bank, but the stickiness of short-term inflation still provides breathing space for the euro. China's US$310 billion trade surplus with Europe also supports expectations for external demand in the euro zone.
Bearish for the pound: GBP/USD fell slightly on Monday toAround 1.3200, although UK GDP increased by 0.7% in the first quarter, GDP fell by 0.3% in April. The recovery momentum of the service industry and manufacturing industry was insufficient. The market expected the Bank of England to cut interest rates ahead of schedule next year, suppressing the flexibility of the pound exchange rate.
RMB: Foreign trade resilience supports the bottom, and policy signals attract attention: On the positive side, China's trade surplus with Europe surpassed the United States for the first time, and exports of new energy vehicles to Europe surged by 42% from January to October. The resilience of foreign trade supports the RMB exchange rate; the export PMI rebounded more than expected in November, strengthening expectations for economic recovery. We need to pay attention to the central bank's central parity guidance. If there are continuous upward signals, it will further boost the RMB. The negative news www.xmasseuse.comes from the fact that the manufacturing PMI dropped to 49.9 in November, and there is still the risk of short-term economic fluctuations.
Japanese Yen: The continuation of easing suppresses the exchange rate: the Bank of Japan relaxed the fluctuation range of 10-year government bond yields, scaled down the purchase of 30-year government bonds, and the governor warned of the risk of delaying interest rate hikes. Although USD/JPY is under moderate bearish pressure, it is close to 155.50, but the tone of long-term easing policy is difficult to change, and the pressure for depreciation of the Japanese yen has not been fundamentally relieved.
Australian dollar: drag down by weak data: The fall in China's manufacturing PMI directly impacted the Australian dollar. The Australian dollar/US dollar opened lower than 0.6550. As the "shadow currency" of the Chinese economy, China's infrastructure and real estate policy trends need to be closely followed in the future.
The situation in the Middle East continues to be tense, the Lebanese-Israeli conflict is on the verge of escalating, and the Red Sea shipping crisis has intensified, pushing gold to a high of US$4,250. Rising risk aversion has caused funds to rotate between the U.S. dollar and gold, exacerbating volatility in the foreign exchange market. Minsheng Securities pointed out that emerging markets are expected to have better growth in a weak U.S. dollar environment, which may attract capital inflows into Asia's high-interest currencies, and it is necessary to pay attention to changes in capital flows.
The short-term focus is on three major nodes: preview of the Federal Reserve’s December interest rate meeting, November inflation data in the Eurozone, and progress in the situation in the Middle East. In terms of operation, it is recommended to focus on range trading. The US dollar index focuses on the support and resistance of 99.20-99.80. The EUR/USD focuses on gains and losses at the 1.1600 mark. The RMB relies on the mid-parity fluctuation range layout. Enterprises have strong demand for foreign exchange settlement and purchase at the end of the year, and they need to be wary of late-day changes caused by shrinking liquidity.
The above content is all about "[XM official website]: Collection of good and bad news affecting the foreign exchange market". It is carefully www.xmasseuse.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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