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A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Decision Analysis】: 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:
1. Economic data and policy trends
(I) European and American manufacturing PMI data are released, and the euro zone economy is under pressure. Today, the initial value of manufacturing PMI in France, Germany and the euro zone in June will be announced. The market generally expects that the euro zone manufacturing PMI will still be below the boom and bust line. If the data is lower than expected, it may intensify market concerns about the weak euro zone economy and further suppress the euro exchange rate. At the same time, the initial value of the S&P Global Manufacturing PMI in June will be released in the evening. If the data exceeds expectations, it may boost the US dollar index and intensify the differentiation between the US dollar and the euro. (II) Federal Reserve officials spoke intensively, and their policy stance was eccentric.
Feders Daley, Bowman and other officials will deliver speeches today, and the market is paying attention to their latest statements on inflation and interest rate policies. Judging from the signals released by the recent Fed interest rate meeting, although interest rates remain unchanged, the dot chart shows that the expectation of interest rate cuts has weakened this year and the inflation forecast has been raised to 3.1%, highlighting the vigilance of inflation risks. If the official's speech continues the hawkish tone, it may strengthen the short-term support of the US dollar and suppress non-US currencies.
(III) The European Central Bank's interest rate cut cycle is xmmarkets.cning to an end, and the euro has received structural support.
The European Central Bank implies that the interest rate cut cycle is xmmarkets.cning to an end after cutting interest rates by 25 basis points on June 5. Despite weak economic growth in the eurozone, low interest rate environments and fiscal stimulus packages such as Germany's 46 billion euro corporate tax exemption may gradually boost market confidence. In addition, the eurozone's inflation rate fell to 1.9% in May, providing room for interest rate cuts, but we also need to be wary of the potential impact of the rebound in energy prices on inflation.
2. Geopolitics and trade risks
(I) The situation in the Middle East escalates, and risk aversion prevails the market
In the early morning of June 23, Iran launched a new round of strikes on Iran's nuclear facilities, using about 30 Tomahawk cruise missiles. The escalation of geopolitical conflicts has boosted market risk aversion sentiment, and traditional safe-haven currencies such as the Japanese yen and Swiss franc may strengthen. At the same time, the shipping risks of the Strait of Hormuz have intensified, and the price of Brent crude oil remains at a high of US$76 per barrel, which may be transmitted to inflation through energy costs, affecting the monetary policies of relevant countries.
(II) The United States imposes tariffs on steel home appliances, and trade frictions escalate
From today, the United States imposes a 50% tariff on steel home appliances such as washing machines and refrigerators, involving major exporters such as China and the European Union. Chinese home appliance xmmarkets.cnpanies such as Midea and Gree have evaded tariffs by setting up factories overseas, but may still impact the export data of relevant countries in the short term, exacerbating trade tensions. The EU plans to counter US goods of 21 billion euros, which may further drag down the euro exchange rate.
3. Market sentiment and capital flow
(I) A-share expectations decline first and then rise, and global risk preferences are differentiated. Institutions predict that the A-share market may show a "first fall and then rebound" trend today. If the early trading volume exceeds 220 billion yuan and the weighted stocks cooperate, a technical rebound may be xmmarkets.cnpleted. The stabilization of A-shares may alleviate the pressure of global risk asset selling, but the situation in the Middle East and Fed policy uncertainty may still suppress risk appetite. In addition, the recent net outflow of northbound funds needs to be paid attention to the impact of changes in their flows on emerging market currencies. (II) The US dollar index has been technically adjusted, and the xmmarkets.cnpetition for key support levels is fierce.
The US dollar index has recently fallen below the 104.00 mark, and multiple negative factors (such as the downward adjustment of the US sovereign credit rating and weak economic data) suppress its upward space. But if PMI data in Europe and the United States differentiates, or Fed officials send hawkish signals, the dollar may gain support around 103.50. Technically, the US dollar index needs to stand firm at 104.00 to confirm the rebound trend, otherwise it may further fall to 103.00.
IV. Currency pair strategy analysis
(I) Euro-USD (EUR/USD)
Soft euro zone economic data and escalation of trade frictions may continue to suppress the euro, but the European Central Bank policy bottom and geopolitical risk mitigation expectations provide support. If the euro zone manufacturing PMI falls below 45, the euro may fall to 1.0850; on the contrary, if the data exceeds expectations, it may rebound to 1.0950.
(II) USD/JPY (USD/JPY)
The escalation of conflict in the Middle East has pushed up risk aversion sentiment, and the yen may strengthen, but the Bank of Japan's ultra-loose policies limit its appreciation space. If U.S. Treasury yields rebound, the US dollar may gain support against the Japanese yen around 138.00; if the conflict continues, it may drop to 136.00.
(Three) British Pound against USD (GBP/USD)
The UK's manufacturing and service industry PMI data in June will affect the pound trend. If the data is better than expected, the pound may rebound to 1.2500; if it is lower than expected, it may fall below 1.2350. In addition, the Bank of England policy expectations and the Fed's Fed's differentiation are still the main risk points.
5. Summary and operational suggestions
Today, the long and short factors in the foreign exchange market are intertwined, and geopolitical risks and economic data differentiation dominate the market. Investors need to pay close attention to the following key points:
Economic data: Eurozone and US manufacturing PMI data may cause severe fluctuations in the euro and the US dollar.
Central Bank Remarks: If Federal Reserve officials speak hawkishly, it may boost the dollar; the European Central Bank policy bottom may support the euro.
Geo-situation: The escalation of conflict in the Middle East may push up safe-haven currencies, affecting energy prices and inflation expectations.
Technical: The xmmarkets.cnpetition for the US dollar index in the range of 103.50-104.00 will determine the short-term direction.
In terms of operation, it is recommended to adopt the "light position, stop loss, and diversification" strategy:
Euro/USD: wait and see, wait and see, and wait for data guidance. If it falls below 1.0850, you can short it lightly.
Dollar vs. Japanese Yen: Go long with light positions around 138.00, stop loss at 137.50, and target at 139.00.
GBP/USD: If you stand firm at 1.2450, you can go long with a light position, stop loss of 1.2400, and target of 1.2550.
Hell-haven currencies: The Japanese Yen and Swiss franc can be used as hedging tools to buy on dips when conflicts escalate.
In short, in a xmmarkets.cnplex and changeable market environment, investors need to remain cautious and flexibly adjust their strategies in xmmarkets.cnbination with the news and technical aspects to avoid excessive leverage and emotional trading.
The above content is all about "【XM Foreign Exchange Decision Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully xmmarkets.cnpiled 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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