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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The EU lowers its economic growth expectations in 2025, and analyzes the short-term trends of spot gold, silver, crude oil and foreign exchange on May 19". Hope it will be helpful to you! The original content is as follows:
The three major futures indexes all fell, Dow futures fell 0.88%, S&P 500 futures fell 1.34%, and Nasdaq futures fell 1.77%. The German DAX index fell 0.2%, the UK's FTSE 100 index fell 0.285%, and the French CAC40 index fell 0.37%.
⑴ The European Commission expects that despite facing global trade tensions, the EU economy will still grow in 2025, but its growth rate is lower than previous expectations. ⑵ The gross domestic product (GDP) of 27 EU member states is expected to grow by 1.1% this year and 1.5% next year. ⑶The GDP of the euro zone (20 countries using the euro) is expected to grow by 0.9% in 2025 and 1.4% in 2026. ⑷In November last year, the European Commission had predicted the overall growth of the EU this year by 1.5% and the euro zone grew by 1.3%. ⑸ EU Economic Commissioner Valdis Dombrovskis said that despite the intensified trade tensions and rising global uncertainty, the EU economy still showed resilience. ⑹ He pointed out that strong labor market and wage increases will support economic growth in 2025, although the growth rate is relatively moderate. ⑺Donbrovskis calls on the EU to take decisive actions to enhance competitiveness in order to promote sustained economic growth.
⑴Moody's downgrade of the US credit rating to Aa1, causing a sharp decline in Treasury bonds, the US dollar and stock markets. ⑵ThisThe second downgrade was due to the expansion of the US fiscal deficit and the rising interest costs, which reactivated the transaction model of "selling the US". ⑶ At the same time, the key U.S. House of Representatives Committee passed Trump's "Great American Act", which may increase the US $32 trillion deficit by another 3 trillion to 5 trillion US dollars. ⑷Affected by this, the swap spread narrowed and the yield curve compressed. Although the money market interest rates rose, SOFR futures fell sharply. ⑸ The long-term bond market is facing tremendous pressure, and the yield curve is further compressed. ⑹The sharp rise in absolute yields and the continued “selling the United States” transactions have led to a reduction in new issuance plans for investment-grade bonds as borrowers wait for market stability. ⑺Nearly 90% of the company's financial report in the first quarter was announced, and bond issuance this week is expected to be between 25 billion and 35 billion US dollars, but the negative market environment makes swap traders more inclined to the receiver, and some interest rate lock-in swaps set on Friday have been lifted.
The British government confirms that Prime Minister Stamer has reached a new agreement with the EU, which will help achieve its core mission: to promote economic growth, support UK employment, and make the people's "wallets more prosperous". Part of the agreement is to sign a new SPS agreement to reduce cumbersome procedures and make import and export of food and beverages easier, thereby easing business burdens and reducing border truck queues. Routine inspections of some animal and plant products will be completely cancelled, and ultimately, this will likely reduce food prices, enrich the types of supermarket shelves, and allow people to gain benefits. In addition, Britain and the EU have connected the carbon emission trading system and strengthened emission cooperation to improve UK energy security and avoid companies from being hit by the upcoming carbon taxes that the EU will implement next year. These two measures alone are expected to bring nearly £9 billion to the UK economy by 2040. In addition to the above measures, the UK and EU have also reached an agreement on accessing EU facial recognition data, allowing British tourists to use more EU electronic customs clearance ports, launching "pet passports", reaching a new UK-EU security and defense partnership, exploring youth exchange programs, and responding to issues such as illegal immigration and fishery access.
⑴ The market has once again seen "short the US" transactions, the US dollar and US stock markets weakened, while US bond yields rose, and Moody's downgrade of the US credit rating became a catalyst. ⑵The rating downgrade was not an accident, but a lagging reaction to the 2011 S&P and Fitch downgrade actions in 2023. ⑶ However, given the current vulnerability of the US dollar, this event is enough to prompt traders to start selling again. ⑷ The timing of downgrade is worth paying attention to, as US President Trump pushes for a tax cut bill, which passed the House Budget Committee last week and will be submitted to the House Rules Committee this week. ⑸ The bill is expected to increase national debt by $3 trillion to $5 trillion in the next decade, and the downgrade may make investors refocus on fiscal deficit issues. ⑹The bond market's "bearers" may return due to the lack of credible spending cuts to offset tax cuts, which willStrengthen the market's impulse to sell the dollar. ⑺At present, U.S. Treasury yields have risen by 9 to 12 basis points, beginning to approach a more threatening level to U.S. assets. ⑻The next key level of the 30-year U.S. Treasury yield is 5%, which has provided resistance many times this year, with a peak of 5.18% above 2023. ⑼ The short-term key level of the 10-year U.S. Treasury yield is 4.6%, which protects the year-to-date high of 4.8%.
⑴JPMorgan Investor Day, investors are paying attention to the impact of US tariff policies on the economy and business, as well as the bank's successor plan. ⑵ Investors want to learn more about the details of stock buybacks and AI applications due to economic uncertainty. ⑶JP Morgan CEO Jamie Dimon will demonstrate banking strategy and business sentiment insights. ⑷ Investors are looking forward to knowing potential successor information, although they do not expect Dimon to announce his succession plan immediately. ⑸Dimon once said that the succession schedule is "not five years anymore", and current candidates include Troy Rollboa, Doug Petno, Marian Lake and Mary Edos. ⑹Analysts expect banks' earnings outlook to be stable and their net interest income outlook has been revised in April. ⑺Transaction earnings are expected to remain strong, but investment banking expense growth may slow. ⑻Investors are also paying attention to how JPMorgan Chase can use its excess capital and technology budget to drive the development of artificial intelligence.
⑴ According to a Reuters survey of economists, the Indonesian central bank (BI) will resume its interest rate cut cycle on May 21, with an expected 25 basis points cut, as the recent strengthening of the Indonesian rupiah provides room for the central bank to support economic growth. ⑵ Indonesia, as the largest economy in Southeast Asia, grew 4.87% in the last quarter, the slowest in three years, while the rupiah has recovered from its depreciation in April, easing pressure on the central bank to maintain monetary tightening. ⑶Inflation rose to the central bank's target range of 1.5% to 3.5% in April, and the central bank kept interest rates unchanged in the past three months. ⑷ Indonesian Central Bank Governor Perry Vajiyo said in April that the central bank's short-term priority goal is to stabilize the currency, and once it stabilizes, the room for interest rate cuts will be more open. ⑸ Since then, the Indonesian rupiah has appreciated by more than 2.4%. ⑹In a Reuters survey from May 14 to 19, 20 of the 32 economists expected the central bank to lower the benchmark interest rate from 5.75% to 5.50%. ⑺ Overnight deposit and loan facilities are also expected to be lowered by 25 basis points to 4.75% and 6.25% respectively. ⑻More than half of economists expect key interest rates to drop to 5.25% by the end of the third quarter. ⑼ However, economists' forecasts for interest rates in 2025 vary greatly. The median forecast shows that policy interest rates will fall by 50 basis points from the current level to 5.25% by the end of the year. ⑽Some economists believe that the rupiah volatility may limit the central bank's ability to cut interest rates significantly in support of growth.
⑴Germany Trade Association (HDE) said on Monday that GermanyOnline retail demand is growing, and despite the sluggish consumer sentiment, online retail revenue is expected to grow 4% year-on-year to 92.4 billion euros in 2025, up from the previous forecast of 3%. ⑵In 2024, Germany's retail revenue increased by 1.1%, and its overall performance was stable after seasonal adjustments. ⑶HDE pointed out that online retail has once again become a strong growth driver for Germany's retail industry, especially in the growth of online shopping in categories such as food and cosmetics. ⑷ Although German consumer sentiment has improved due to the new government's economic stimulus plan, trade tensions and economic downward pressures still have an impact on household spending. ⑸ German consumers are increasingly choosing Chinese e-commerce platforms, such as Temu and Shein, a subsidiary of Pinduoduo, which have shifted their focus to the European market due to US tariff policies.
⑴Moody's downgrades U.S. credit rating from "Aaa" to "Aa1", causing market uneasiness. The 30-year U.S. bond yield rose to its highest level this year on Monday. ⑵ Although this rating downgrade is not surprising, it highlights the fragility of the US government's fiscal policy. ⑶The yield on the 30-year U.S. Treasury rose by more than 12 basis points to 5.2%, the highest this year, with the yield on the 10-year U.S. Treasury rose by 11 basis points to 4.55%. ⑷U.S. President Trump's tax cut bill has been approved by the Critical Committee and could increase debt by $3 trillion to $5 trillion over the next 10 years. ⑸ Market confidence continues to be frustrated by Trump's trade policy, and investors' confidence in US financial assets is gradually weakening. ⑹The 5-year credit default swap (CDS) rose to 55 basis points, the highest level in the week, indicating that market concerns about U.S. Treasury risks have increased. ⑺ Rising U.S. Treasury yields usually support the US dollar, but this time it caused the US dollar to weaken, and currencies such as the euro, the yen and the Swiss franc were relatively strengthened. ⑻S&P 500 and Nasdaq futures fell by more than 1%, and the overall market sentiment was hit.
⑴ The Bank of Japan's investigation released on Monday showed that the function of the Japanese bond market has deteriorated sharply in the three months to May. ⑵This phenomenon reflects the pressure brought by uncertainty in US trade policy and the sharp fluctuations in ultra-long-term bond yields. ⑶ The diffusion index measuring the functions of Japan's Treasury bond market fell to -44 in May, lower than -13 in February, the lowest level since May 2023. ⑷ The index worsened for the first time in nine quarters and had a record decline, highlighting the impact of Trump's reciprocity tariffs announced on April 2 on the market. ⑸ Many respondents said that the fluctuations caused by Trump's tariff remarks weakened liquidity on ultra-long-term Treasury bonds, a Bank of Japan official mentioned in an investigation briefing. ⑹ The Bank of Japan will review its bond reduction plan to March in June and prepare plans for April 2026 and beyond. The results of this investigation will be one of its considerations. ⑺As the market's attention to the deterioration of Japan's fiscal situation increases, the yield on ultra-long-term government bonds is also steadily rising.Because Prime Minister Shigeru Ishida faces political pressure to increase spending or reduce taxes before the July Senate election. ⑻Since April, ultra-long-term treasury yields have continued to rise, while other maturity yields have remained stable. The 40-year Treasury yield hit a record high of 3.445% last week.
Euro/USD: As of 20:20 Beijing time, the euro/USD rose, and is now at 1.1265, an increase of 0.89%. Before the New York Stock Exchange, the (Euro-USD) price rose in recent intraday trading, breaking the top of the bear market correction price channel that short-term restrictions on its previous trading, supported by positive signals from (RSI) and surpassing the negative pressure from the EMA50.
GBP/USD: As of 20:20 Beijing time, GBP/USD rose, now at 1.3377, an increase of 0.71%. Before the New York Stock Exchange, the (GBP/USD) price rose in recent intraday trading, affected by its bullish biased trend line on a short-term basis, and with its support from EMA50, it provides more positive motivation to help it achieve some returns. It notes the positive overlapping signals on (RSI), which support more price increases after reaching the oversold level.
Spot gold: As of 20:20 Beijing time, spot gold rose, now at 3242.28, an increase of 1.30%. Before the New York Stock Exchange, gold prices rose in recent intraday trading, supported by positive signals from (RSI), breaking through a smaller bearish bias line in the short term, with the EMA50 representing a barrier and creating a negative pressure when it breaks below that line.
Spot silver: As of 20:20 Beijing time, spot silver rose, now at 32.581, an increase of 1.01%. Before the New York Stock Exchange, the (silver) price fell in recent intraday trading, affected by reaching its EMA50 resistance due to a steady lower than the current resistance of $32.70, and a negative overlap signal on the (RSI) forced the price to rebound after reaching overbought levels.
Crude oil market: As of 20:20 Beijing time, U.S. oil fell, now at 61.590, a drop of 0.60%. Before the New York Stock Exchange, (crude oil) prices fell in recent intraday trading, with negative signals on (RSI) dominant, and after reaching overbought levels, the price depends on the short-term basis.The correction bias line of the rise, while relying on the support of EMA50, is the last chance to get the positive momentum needed for recovery.
⑴ Barclays UK interest rate strategist Moyeen Islam pointed out that the Bank of England may cut interest rates in June due to the continued weak UK economic activity data. ⑵ He mentioned that the UK economic data "repeatedly below central bank expectations", which increased the possibility of interest rate cuts. ⑶ Last week's data showed that the UK's wage growth rate slowed to 5.6% in the three months ended in March from 5.9% before. ⑷The market is currently paying attention to the UK inflation data released on Wednesday. ⑸ Data from the London Stock Exchange shows that the money market expects the probability of the Bank of England's interest rate cut in June is only 15%.
The above content is all about "[XM Foreign Exchange Decision Analysis]: The EU lowers its economic growth expectations in 2025, and the short-term trend analysis of spot gold, silver, crude oil and foreign exchange on May 19" 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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