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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: China and the United States are rumored to be important again! OPEC maintains the growth rate of crude oil demand this year and next two years." Hope it will be helpful to you! The original content is as follows:
The US dollar index rose slightly on Wednesday, rebounding from an earlier decline, with investors paying attention to the latest signals of whether global trade conflicts will continue to ease.
Earlier this week, the US dollar index jumped more than 1% on Monday, hitting a one-month high as the U.S. and China reached an agreement to temporarily lower tariffs on each other, and the market's concerns about the possible global recession in the trade war between the two major economies in the world weakened.
However, the dollar fell after the U.S. CPI data fell short of expectations on Tuesday. "It is obvious that the market is still very concerned about trade issues, which is still an important catalyst for the change in the foreign exchange market." As trade tensions ease, the market lowered its expectations for the Fed's interest rate cut this year. According to LSEG data, the market currently estimates that the Federal Reserve will cut interest rates by at least 25 basis points as early as September, with a chance of 74%, which was previously estimated to be July.
Australia's wage price index rose 0.9% month-on-month, slightly higher than market expectations of 0.8%. The public sector grew by 1.0% month-on-month, surpassing the private sector's 0.9% month-on-month growth.
On the year, wages rose 3.4%, up from 3.2% in the previous quarter, the first increase in annual wage growth since mid-2024.
The rise in annual wage growth was driven primarily by the public sector, with a year-on-year growth rate significantly increasing to 3.6% from 2.9% in the fourth quarter. Private sector wages grew steadily at 3.3% year-on-year.
Japan's PPI rose 4.0% year-on-year in April.It is slightly lower than 4.3% in March, in line with market expectations. Despite the small economic slowdown, the index climbed to an all-time high of 126.3, setting a new high for the eighth straight month, highlighting the ongoing cost pressure at the wholesale level.
However, data also show that the full tariffs announced by the United States in early April have little direct impact, partly due to the 90-day suspension.
The Japanese import price index, denominated in yen, fell sharply in April by -7.2% year-on-year, following a year-on-year decline of -2.4% in March. This decline suggests that the appreciation of the yen during market turbulence helps protect Japanese importers from some price shocks, at least for now.
Bank of England Monetary Policy Committee member Catherine Mann explained her significant policy shift in an interview with CNBC, revealing why she changed from supporting a 50 basis point rate cut in February to voting for a pause at last week’s meeting.
Mann listed the flexibility of the UK labour market as a key factor in her reassessment. While recent data suggests a ease in the “labor market slowdown”, she believes “this is not a nonlinear adjustment.”
Mann also pointed out the new risks posed by tariffs. She warned that the increase in tariffs imposed by the United States on countries such as China may lead to a large amount of transfer of exports into markets such as the United Kingdom. While this may temporarily ease commodity prices at the border, she warned that domestic retailers may use the opportunity to rebuild profit margins and keep upward pressure on consumer price inflation, rather than alleviate it.
Crucially, Mann stressed the need to see the widespread "loss of pricing power" in the company. “I need to see that companies are starting to set prices more modestly on a variety of products,” she added. "Commodity price inflation is actually rising, not falling."
In his speech today, Joachim Nagel, a member of the ECB Management Committee of Germany, emphasized the continued importance of the US dollar as a global reserve currency. At the same time, he expects the euro to gradually play a more important role in the international financial system in the next few years.
Looking ahead to the ECB’s policy meeting in June, Nagle reiterated that the interest rate decision will be guided by upcoming data. He acknowledged uncertainty about the impact of U.S. tariffs on inflation and growth in the euro zone.
The latest ECB staff forecast to be released next month is crucial to making decisions. Nagel also stressed that central banks must increasingly adapt to operating in an environment of ongoing geopolitical and policy-driven uncertainty.
Chicago Fed Chairman Austan Goolsbee warned against over-interpreting the weak inflation data in April, noting on the NPR that it is too early to measure the real impact of rising U.S. import tariffs.
While recent consumer price data suggest inflation may be easing, GOolsbee stressed that the Fed needs to be more clear before making a firm policy judgment, describing the current environment as “a lot of dust in the air.”
He acknowledged that the data so far “show everything is normal” but stressed that it is difficult to draw long-term conclusions in the ongoing short-term volatility.
"It is unrealistic to expect businesses or central banks to rush to conclusions in such an uncertain environment""" he said.
Feder Vice Chairman Philip Jefferson said in a speech today that he supported the decision to keep the federal funds rate unchanged last week, which he saw as "moderately restrictive." He noted that current policymaking is "well-in position" to deal with a range of changing economic conditions.
Jay Ferson noted that consumer and business confidence has dropped sharply this year, and said he is closely following the “hard data” to look for signs of weakening economic activity.
In inflation, he acknowledged that higher tariffs could increase upward pressure on prices in the coming months, although it is still uncertain whether the impact is “temporary or sustained.” Jefferson said that due to the high risk of both sides on both missions, “the current monetary policy stance is fully capable of responding to potential economic development in a timely manner.
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