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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: The US index weekly "hammer line" stops falling, and the rebound is difficult to change the short-term downward risk." Hope it will be helpful to you! The original content is as follows:
On Wednesday, the US dollar index continued to rebound as Trump and Becente released optimistic signals in trade negotiations. As of now, the US dollar is quoted at 99.69.
Tariff-
① British media: Trump plans to exempt automakers from partial tariffs
②The EU has proposed an initiative to buy more US liquefied natural gas and plans to reduce tariffs on some goods
③ US Treasury Secretary: The US-Japan trade dialogue has not set specific monetary targets
④ A total of 12 states in the United States sued the Trump administration for abuse of tariff policies to "illegal"
⑤ The United States launched a national security investigation on truck imports
⑥ Trump: Car tariffs on Canada may increase in the future.
U.S. Treasury Secretary Bescent: The United States’ priority does not mean that the United States “works alone.” Reiterate that the United States still adheres to a strong dollar policy.
Feder Beige Book: Due to the increased economic uncertainty caused by factors such as tariffs, the outlook in many regions has deteriorated significantly.
The US S&P Global Comprehensive PMI hit a 16-month low in April. The total number of new home sales in the United States in March was an annualized to a new high since September 2024.
Goldman Sachs lowered its forecast for the first quarter of the U.S. GDP growth rate to 0.1%.
Trump posted on his social media platform "Real Social" that Zelensky said, "Ukraine will not legally recognize Crimea's occupation.” remarks are very harmful to peaceful negotiations with Russia. According to the Wall Street Journal, Trump’s choice not to fire Powell was due to concerns between U.S. Treasury Secretary Becent and U.S. Commerce Secretary Lutnik.
IMF: Tariffs increase are expected to increase global public debt by 2.8 percentage points in 2025, reaching 95.1% of GDP.
Westpac analysts said that the RBA’s monetary policy committee is currently expected to cut interest rates by 25 basis points at its May 20 meeting. In the past few quarters, the short-term outlook for the RBA is one It is directly driven by data. This makes it tricky to predict what decisions the Monetary Policy Committee will make after the upcoming meeting. It is not certain until you see the latest data. For example, if the revised average inflation rate in the fourth quarter of 2024 did not fall unexpectedly, the committee will likely keep interest rates unchanged at its February 2025 meeting. However, the turbulence overseas has changed the situation and reversed the risk profile. Even if the inflation data in the first quarter is a bit disappointing, you can be sure that a 25 basis point cut in May will be a 25 basis point cut in May. We still expect two more rate cuts this year after the May cut, but the risk in terms of timing and magnitude has shifted from previous upside risk to downside risk.
Trump surrenders on tariffs and the Fed, and investors can easily attribute it to market reactions. The power of the market is not magical. Asset prices are just assessments of the economic outlook and future returns by many and concluded that no matter the imposition of tariffs or Trump's interference in the Fed, they are not good for them. The market is a real-time poll of money. In this sense, the market is important to Trump, but there are no guarantees that he will be ruled by them. I hope the market has imposed some restrictions on Trump's will, which is a good thing for investors, but there are three major warnings.
Firstly, don't think Trump The price has been set at the bottom—the S&P 500 fell to a low of 4835 earlier this month, and the ICEX dollar index did not fall below 100, and even the 30-year Treasury yield was not close to 5%. If it was the market that forced Trump to reverse, it was likely a sign of capital flight, and concurrent losses, rather than some kind of Trump put option in the stock market or sensitivity to specific bond yields.
Secondly, it shows how much risk Trump is willing to take before turning. Attacking the Fed’s independence and imposing tariffs will hurt the market, but he did it anyway. If prices have to fall sharply before he launches his next unfamiliar plan, thenInvestors can only get limited comfort during the decline.
Third, it all is based on the assumption that Trump has changed direction because of the market, and we cannot be sure that this is true. Trump may ask another adviser to discuss next time, or he may have made it up by himself. Investors should not be complacent that they should control Trump.
Next week, the British Monetary Policy Committee (MPC) will usher in a period of intensive speeches among members. This will be their last public statement before the May interest rate meeting, so their final view on the impact of tariffs will become the core focus of market attention.
According to our understanding, Bank of England Deputy Governor Briden and Bank of China Commissioner Green previously admitted that the US tariff policy will have an impact on UK economic growth, but its specific impact on inflation is still unclear. We believe that tariff policies have made the trade-off between growth and inflation clearer, and it is expected that a 25 basis point interest rate cut in May is a foregone conclusion.
After Trump eased his attitude toward tariffs and Powell, stocks rose, key bond yields fell, the dollar index continued yesterday's high, and gold attempted to rebuild its momentum fell sharply. But if you think that just because Trump said that in an era when central bank independence would be questioned by real-world political demands, he wouldn't fire Powell; or because he said something nice about tariffs for the ninth time as the world begins to split along the geopolitical dividing line, and that the story will have a perfect finale of "living together happily", then obviously you like fairy tales. Sadly, we still need to build a new global security, financial, economic and trade architecture to replace the old ones that aren’t working well enough and facing collapse, and that will take at least a thousand and one night!
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