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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: Major "tariff" negotiations in China and the United States!, Fed interest rate resolution is coming." Hope it will be helpful to you! The original content is as follows:
On May 7, during the trading session of the Asian market on Wednesday, the US dollar index hovered at 99.45, gold fell back to 3,399 US dollars, and Bitcoin surged to 97,000 US dollars. U.S. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer have reportedly traveled to Switzerland this week to negotiate with senior Chinese officials about U.S. President Trump's reciprocal tariffs. Looking ahead to the future, Fed interest rates and Chairman Powell's speech became the focus.
Reuters reported that Becent and Greer will meet with China's top economic official in Switzerland later this week, and the two U.S. agencies said Tuesday that it marks a first step in potential negotiations on Trump's tariff attack.
The U.S. Trade Representative’s Office and the Treasury Department said Greer and Becente will travel to Geneva together on Thursday and will meet with Swiss President Karin Kate-Sut to discuss reciprocal trade negotiations.
Reuters pointed out that the above-mentioned agency did not disclose the list of Chinese officials who will attend the Beijing meeting. But Vice Premier He Lifeng is widely regarded as China's economic "tsar" and chief trade negotiator.
Bester said in a statement: "Economic security is national security. President Trump is leading the United States to a stronger and more prosperous path at home and abroad. I look forward to conducting fruitful talks as we strive to rebalance the international economic system and make it better serve the interests of the United States."
The People's Bank of China announced a series of comprehensive monetary policy measures to support its economy, first by lowering the 7-day reverse repurchase rate by 10 basis points to 1.40% since MayEffective from the 8th. The People's Bank of China will also lower the deposit reserve ratio by 50 basis points and release about 1T yuan to the banking system.
The new software package is divided into three categories: quantitative tools, price-based tools, and structural tools. The quantitative department focuses on achieving long-term liquidity through lowering the reserve requirement ratio. Price-based measures include lowering benchmark and structural policy interest rates. Structural components aim to introduce credit into strategic areas such as technological innovation, consumption and inclusive finance.
New Zealand's employment rose only 0.1% month-on-month, while the unemployment rate stabilized at 5.1%, better than expected 5.3%.
However, the quality of employment deteriorated, and the shift from a full-time role was significantly changed to a part-time role. Over the past year, full-time employment has dropped by -45k, while part-time positions have increased by 25k.
The participation rate dropped slightly to 70.8%, and the employment rate fell to 67.2%, both of which indicate a gradual decline in the labor market momentum.
Wage growth has also slowed down, with the labor cost index rising 2.9% per year, down from 3.3% in the previous quarter.
The Japanese private sector resumed expansion in April, and the overall purchasing managers index finally rose to 51.2 from 48.9 in March. This improvement was driven entirely by the services industry, with its PPP index climbing to 52.4 while the manufacturing industry is still in a contraction state.
Super strong service activity helped offset the factory drag, with new orders at factories plummeting to cope with the global tariff environment.
While service industry companies reported strong demand, confidence in both the service industry and manufacturing industry deteriorated. Businesses expressed concerns about the broader global outlook and the negative impact of recent U.S. tariff measures on growth potential.
To make matters worse, investment price inflation accelerated to a two-year high, prompting the company to raise sales prices to protect profit margins.
Swiss National Bank Governor Martin Schlegel said that although the central bank does not approve of negative interest rates, it is still fully prepared to reintroduce negative interest rates if necessary.
Schlegel said at an event today, "If we have to do this, negative interest rates, we are certainly ready to do this again."
"Over the past few quarters, we have been saying that we are ready to intervene in the forex market if necessary," Schlegel said.
Just a day after Swiss CPI data showed inflation slowed to 0% in April, the lowest reading in four years. The data sparked expectations that the Swiss National Bank will lower its policy interest rate from its current 0.25% at its upcoming meeting on June 19. There are also growing expectations that interest rates may eventually fall below zero this year.
Eurozone PPI fell -1.6% month-on-month in March, dragged down by a sharp drop in energy costs -5.8% month-on-month. However, excluding energy, PPI rose month-on-month0.1%. The annual PPI was 1.9% year-on-year, down from 3.0% last month.
Most segments experienced slight monthly growth, with capital products growing by 0.1% month-on-month, consumer durable products growing by 0.2% month-on-month, and non-durable products growing by 0.5% month-on-month. The intermediate product remains unchanged.
In the broader EU, PPI also fell -1.6% month-on-month and 2.1% year-on-year. The largest monthly declines in industrial producer prices were Estonia (-8.0%), Spain (-3.9%) and Italy (-3.3%). Greece (+1.3%), Luxembourg (+0.9%) and Slovenia (+0.6%) had the highest gains.
The UK service industry purchasing managers index finally reached 49.0 in April, down from 52.5 in March, the lowest level since January 2023. The PMI composite index also fell to 48.5, the first negative value in 18 months.
S&PGlobal's TimMoore pointed out that increased business uncertainty is a major drag on economic activity. Export conditions are the lowest since the beginning of 2021. The increase in wage costs associated with the increase in national insurance and the rise in national living wage rates have resulted in the largest increase in investment costs since mid-2023. Service providers responded with the biggest price increase in the past two years.
Because "service industry enterprises are ready for the long-term global economic turmoil and the intensification of the risk of economic recession." 22% of companies predict activity will decline in the next 12 months, more than triple the post-2024 election level.
The Eurozone Comprehensive Purchasing Managers Index (PMIComposite) finalized at 50.4, down from 50.9 in March, confirming a weak start in the second quarter. The service industry is an important growth engine, with its readings falling from 51.0 to 50.1, almost stagnating.
Nationwide, Ireland (54.0) leads in growth, followed by Spain (52.5) and Italy (52.1). Germany (50.1) expanded slightly, while France (47.8) fell further into the contraction zone.
Cyrus dela Rubia of Hamburg Commercial Bank pointed out that cost pressures in the service industry remained "relatively high", but the slowing trend in prices increased expectations for the ECB's interest rate cut in June.
Employment growth in the euro zone has stabilized, but amidst continued uncertainty, companies are still reluctant to expand their labor force.
The differences at the national level are becoming increasingly obvious. Germany's growth is fragile, but it is likely to improve in the coming months, backed by its new fiscal stimulus.
Trump: Major announcements will be issued before the trip to the Middle East, and the content does not necessarily involve trade matters.
U.S. Kansas Fed Chairman Schmid will miss FOMC meeting, Minneapolis Fed Chairman Kashkali will vote in place of Schmid.
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