Wonderful introduction:
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Market Comment】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
News: At 2 a.m. on May 8, Beijing time, the Federal Reserve announced that it would maintain the benchmark interest rate at 4.25%-4.50%. This is the third time the Federal Reserve has announced that it will maintain the benchmark interest rate unchanged. The interest rate statement emphasized that inflation and unemployment risks both rose, saying that uncertainty in the economic outlook increased further.
Impact: In the short term, interest rates remain unchanged in line with market expectations, and the impact on the US dollar is relatively neutral. But in the long run, the Fed's cautious attitude towards the economic outlook, as well as the rising inflation and unemployment risks mentioned, may suggest a possibility of a rate cut in the future. If the market's expectations for interest rate cuts increase, it will put some depreciation pressure on the US dollar.
News: Pan Gongsheng, Governor of the People's Bank of China, said on May 7 that in order to promote high-quality economic development, the People's Bank of China will increase the intensity of macro-control and introduce a package of monetary policy measures. This includes reducing the deposit reserve ratio by 0.5 percentage points, which is expected to provide the market with a long-term liquidity of about 1 trillion yuan; lowering the policy interest rate by 0.1 percentage points, etc.
Impact: These policy measures will increase market liquidity, reduce financing costs for enterprises, and help promote domestic economic growth. The improvement of economic fundamentals will provide certain support for the RMB exchange rate. However, measures such as interest rate cuts may further expand the interest rate gap between China and the United States in the short term, bringing certain depreciation pressure to the RMB. However, in the long run, with the stable development of China's economy, the long-term trend of the RMB is still worthy of optimism.
News: EU Trade Commissioner Marlos? Sevkovic said on May 7 that if the tariff negotiations with the United States fail to reach an agreement, the EU will announce the details of the next stage of tariff countermeasures against the United States on the 8th.
Impact: The escalation of trade frictions between Europe and the United States will trigger risk aversion in the market, causing funds to flow to safe-haven currencies, such as the Swiss franc, the Japanese yen, etc. At the same time, this may also have a negative impact on the exchange rate of the euro and the dollar, as the intensified trade tensions will affect the economic growth prospects of both Europe and the United States, and in turn affect the value of their currencies.
News: US stocks closed higher in fluctuating trading on Wednesday, boosted by reports that AI chip regulation would be relaxed, and semiconductor stocks rose in the end. But during most trading sessions, the stock market fluctuated, dragged down by the decline in the share price of Google's parent company Alphabet.
Impact: The performance of US technology stocks has a certain indirect impact on the US dollar exchange rate. Rising tech stocks usually attract global capital to flow into the U.S. stock market, thus providing some support for the dollar. However, if the volatility of technology stocks is too severe, leading to a decline in market risk appetite, funds may flow out of the US market, posing depreciation pressure on the US dollar.
News: The US dollar rose 1% against the yen to 143.840 yen, breaking the three consecutive days of decline. The euro was down 0.44% against the US dollar at $1.131,650, ending its three consecutive trading days of gains.
Impact: Changes in the exchange rate of the US dollar against the yen and the euro reflect the market's relative demand and expectations for different currencies. The rise in the US dollar against the yen may be due to the reopening of the Japanese market after a two-day holiday, changes in capital flows, and relatively stable market expectations for U.S. economic and interest rate policies. The decline in the euro against the dollar may be affected by EU-US trade tensions and market concerns about the economic outlook of the eurozone.
The above content is all about "【XM Foreign Exchange Market Review】: Collection of positive and negative news that affects the foreign exchange market". It was carefully 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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