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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: Trump's sudden transmission of the chip policy "has a loud bang!". Hope it will be helpful to you! The original content is as follows:
On May 14, during the trading session of the Asian market on Wednesday, the US dollar index hovered around 101. Bitcoin counterattacked $104,000 and gold fell back to $3,241. The U.S. Consumer Price Index (CPI) was lower than expected, exacerbating the Federal Reserve's expectation of a rate cut. China and the United States agree to a 90-day tariff truce, and US President Trump plans to completely reform the export regulations for artificial intelligence (AI) chips.
Bloomberg reported that the Trump administration plans to overhaul AI semiconductor export regulations and abandon the practices of the former President Biden era, which have been strongly opposed by U.S. allies and companies including Nvidia and Oracle.
According to the move announced by the U.S. Department of Commerce on Tuesday, the United States will revoke the so-called AI proliferation rules introduced by President Biden, which sets up three broad access levels for countries seeking AI chips, which were originally scheduled to take effect on May 15. According to people familiar with the matter, the Trump administration is drafting its own proposal and may turn to negotiating separate agreements with countries.
The agency said it will also issue guidance that clearly states that “use of Huawei Technologies’ AscendAI chips anywhere in the world violates U.S. export controls.” In addition, the agency plans to warn the public that it allows U.S. AI chips to be used to develop Chinese AI models.
The U.S. Department of Commerce said in a statement Tuesday that Biden's regulations "will reduce diplomatic relations in dozens of countries to second-class status, thereby damaging U.S. diplomatic relations with those countries." The statement also stated that a notice of formal revocation of the provision will be issued and alternative provisions will be issued “in the future”.
The U.S. Department of Commerce said in a statement that regardless of the resultsHow it will be "a bold, inclusive strategy to develop U.S. AI technology with trusted countries around the world while preventing it from falling into the hands of our opponents."
The core of the ongoing policy debate is how to regulate the export of semiconductors to China. Both Trump and Biden administration officials are trying to combat China's semiconductor ambitions amid concerns that advanced chips and AI technologies may give China a military advantage.
Abolishing the AI proliferation framework will not change Trump's recent strengthening of measures against China. Instead, as governments around the world seek to develop domestic AI capabilities, this will provide new opportunities for other countries to negotiate chip access. These transactions may be affected by investment commitments or broader trade and diplomatic considerations.
Bank of Japan Deputy Governor Shinichi Uchida said yesterday that although Japan's potential inflation and medium- and long-term inflation expectations may "temporarily stagnate", wage growth is expected to remain strong due to "Japan's job market is very tight."
He added that the company may continue to “pass on rising labor and transportation costs by raising prices.”
Uchida also stressed that the Bank of Japan will assess the economic impact of U.S. trade policy without preconceived ideas and acknowledge that there is a high degree of uncertainty in the global outlook.
Investor sentiment in Germany and the broader euro zone improved significantly in May, with the German ZEW economic prosperity index jumping from -14.0 to 25.2, far higher than expected 9.8. The eurozone confidence index followed closely, rising from -18.5 to 11.6, also surpassing expectations.
ZEW President Achim Wambach said the rebound reflects growing optimism about easing trade tensions, the new German government and stabilizing inflation, which helped offset the sharp deterioration last month.
However, the perception of the current situation remains very negative. Germany's current status index further fell from -81.2 to -82.0, lower than expected. The euro zone index improved slightly, but was still -42.2. This divergence suggests that while expectations for the coming months are improving, the recent economic situation remains fragile, especially in Germany.
UK's labor market data in April showed signs of slowing employment, but wage growth continued to be strong. Employment fell by -33k (0.1% month-on-month), while applicants increased by 5.2k. Median monthly salary in April rose 6.4% year-on-year, up from 5.9% last month.
In the three months ending March, the unemployment rate rose slightly from 4.4% to 4.5%, in line with expectations, the highest level since the end of 2021.
Average revenue, including bonuses, increased by 5.5% year-on-year, higher than the 5.2% expectation. Earnings excluding bonuses increased by 5.6% year-on-year, slightly lower than the 5.7% expectation.
The overall US CPI rose only 0.2% month-on-month, lower than the expected 0.3%. The core CPI, excluding food and energy, also rose 0.2%, lower than the 0.3% forecast.
On the year-on-year basis, the overall inflation rate fell from 2.4% year-on-year to 2.3%, the lowest level since April 2021. The core inflation rate stabilized at a year-on-year growth rate of 2.8%, in line with expectations.
Housing remains the main driver of monthly inflation, up 0.3% month-on-month, accounting for more than half of the total increase.
Energy prices also rose by 0.7% month-on-month, while food prices fell slightly by -0.1% month-on-month. Energy costs fell by -3.7% compared to the same period last year, helping to control overall inflation, while food prices rose by 2.8%.
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