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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The US dollar fell to a new low in four years, wait for US PCE data." Hope it will be helpful to you! The original content is as follows:
On Thursday, the US dollar index continued to decline, setting a low since March 2022. Weaker U.S. dollar and falling U.S. Treasury yields are usually good for gold as it reduces the opportunity cost of holding interest-free assets. However, rising oil prices and uncertainty in tariff negotiations may push up U.S. Treasury yields, thereby limiting gold prices to rise. Investors need to pay attention to Thursday's GDP data and initial jobless claims, as well as Friday's PCE data, which may trigger market volatility.
U.S. dollar: The dollar index fell by more than 1.3% for two consecutive days at the beginning of this week, and rebounded slightly during the session on Wednesday. . The geopolitical situation in the Middle East has temporarily eased and dovish statements from Federal Reserve officials have weakened the attractiveness of the dollar. Although Chairman Powell reiterated his position of "not rushing to cut interest rates", the market has digested expectations of the next two interest rate cuts in advance. Weaker consumer confidence data also further suppressed the bullish sentiment of the US dollar. Judging from the technical figure, the US dollar index is in a significant downward trend, continuing to decline from its high point of 107.66. It is currently operating between the middle and lower tracks of the Bollinger Band, and is in a volatile and blank pattern. The current price is close to the Bollinger band's lower track of 97.75. Analysts believe that if it falls below 97.60 support, it will open up further retracement space or test the 97 mark. In terms of resistance, the short term focuses on the 99.00 integer digit and the middle rail of the Bollinger band 98.89, further to 100.02 (Boletie upper rail).
Trump considers appointing the next Federal Reserve Chairman in advance, and considers choosing a new Federal Reserve Chairman in September or October. Consider replacing current chairman Powell, who will expire in mid-2026, with Becent, Malpass and Waller also www.wzhdjgj.competing for the Federal Reserve chairman.
U.S. President Trump held a press conference after attending the NATO summit in The Hague, www.wzhdjgj.comherlands on the 25th, saying that the United States and Iran will hold talks next week and may sign an agreement. "We will have talks with Iran next week and may sign an agreement," Trump said, but he also said he believesThis agreement is not "necessary", but the core demand of the US side is still not to allow Iran to possess nuclear weapons.
The White House Chief Economist said that US President Trump's economic policy will cut the U.S. fiscal deficit by as much as $11 trillion in the next decade. This forecast is very different from what analysts think, who believe government debt will reach record highs in the www.wzhdjgj.coming years. "We estimate that overall, the presidential policy portfolio will result in a deficit reduction of about $8.5 trillion to $11 trillion during the ten-year budget window," Stephen Miran, chairman of the White House Economic Advisory Council, told reporters on a conference call on Wednesday. "These numbers are huge."
Feder Chairman Powell said Wednesday that budget cuts have limited some economic data from federal agencies, but have not yet affected the Federal Reserve's ability to fully measure the strength and direction of the U.S. economy, but the trend of falling data availability is worrying. When answering a question from a senator at the Senate Banking www.wzhdjgj.committee meeting, Powell said: "(I) do not want anyone to think that the data has deteriorated to the point where we find it difficult to understand the economy. Although this is not perfect, its development direction is worrying."
According to the Wall Street Journal, Trump is increasingly dissatisfied with the Fed's attitude of keeping arguing about the issue of interest rate cuts, which prompts him to consider announcing his candidate for the next Fed chairman in advance. Currently, current Chairman Powell has 11 months left in office. According to people familiar with the matter, Trump has been considering whether to choose and announce Powell's successor in September or October this year in recent weeks. Trump's dissatisfaction with Powell may even prompt him to make the decision earlier this summer. The candidates Trump is considering include former Fed director Kevin Wash and National Economic www.wzhdjgj.commission director Hassett. In addition, Treasury Secretary Bescent was also recommended as a potential candidate by his supporters. Other possible nominees include former World Bank President Malpass and current Fed Director Waller. Since the new Fed chairman will not officially take office until May next year, if the candidates are announced this summer or fall, it will be much earlier than the previous three to four-month handover period. This early announcement approach can allow nominees to influence market expectations of future interest rate paths in advance.
Bank's Adarsh Sinha said in a report that since Trump announced the full imposition of tariffs in April, interest rate spreads have no longer been an important driver of the dollar's trend. The decoupling of the US dollar from interest rate spread reflects the structural risk premium in the United States. The drivers include: U.S. tariffs push up inflation and weaken economic growth prospects, the U.S. economy has reached an exceptionalist peak, and increased risk of fiscal deficits. However, interest rate spreads may become a major factor in driving the dollar again, especially if the Fed implements more rate cuts ahead of schedule than expected, Sinha said.
Mitsubishi UF's Derek Halpenny said in a report that the Bank of England may announce in September that it will reduce its quantitative tightening plan and slow down the speed of reducing its holdings of bonds. These changes will take effect from October. Halpenny said Bank of England Governor Bailey on Tuesday suggested a possible adjustment to the central bank's quantitative tightening policy. "Governor Bailey's hints will certainly further increase expectations that the pace of quantitative tightening will slow down." He said that, under other conditions, this should be beneficial for UK government bonds.
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