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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Official Website]: A collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
Core Main Line: Today (April 3, European and American markets are closed on Good Friday) the foreign exchange market focuses on four main lines: the long-term geopolitical situation in the Middle East, high oil prices, stagflation, non-agricultural outlook, and central bank policy repricing. The US dollar index fluctuated weakly, the euro and the renminbi were relatively strong, the Japanese yen was under pressure and approached the intervention line, and the global exchange rate fluctuated violently around the triple logic of inflation-rate hike-recession.
1. Overall positive factors
Risk aversion in the Middle East supports the US dollar. The US-Iran confrontation continues to escalate. Iran and Oman control the Strait of Hormuz and plan to impose tolls. 20% of global oil trade is blocked. Oil prices stabilized above $110, safe-haven funds poured into U.S. dollar assets, and the U.S. dollar was supported by geo-premium. At the same time, U.S. trade conditions improved and inflation rebounded, delaying interest rate cuts, forming a phased xmmarkets.cnbination of "high oil prices + strong U.S. dollar."
Inflation in the Eurozone exceeded expectations, and interest rate hike expectations increased. Eurozone inflation (HICP) in March was 2.5% year-on-year (previous value: 1.9%), with Germany at 2.8% and France at 1.7%, significantly higher than the target. The market is betting that the ECB has a 45% probability of raising interest rates by 25bp in April and a 70% probability in June. The interest rate advantage supports the euro, and the EUR/USD stands firmly above 1.15. Lagarde warns of energy impact on inflation, policy turns hawkish.
The resilience of the RMB is highlighted, and the central parity rate strengthens. China’s policies to stabilize growth have been vigorous, and the resilience of foreign trade has exceeded expectations. The central parity rate of USD/RMB was at 6.8880, and the onshore/offshore exchange rate remained strong. The expansion of the digital renminbi, the improvement of cross-border settlement, and the inflow of risk-averse funds have made the renminbi a "safe haven" for non-US currencies. The impact of high oil prices on China is limited, and domestic demand offsets the pressure of external demand.
xmmarkets.cnmodity currencies have been indirectly supported by oil prices. The trade surplus of oil-producing countries such as Canada and Norway has expanded, and the Canadian dollar and krona have received fundamental support. Australian dollarBenefiting from the recovery in demand in China and the rebound in metals, risk appetite will be more resilient when risk appetite is restored.
2. Overall negative factors
High oil prices triggered global stagflation panic, and the OECD lowered global growth to 2.9% and G20 inflation to 4.0%. High oil prices pushed up PPI/CPI, expectations of interest rate cuts by the Federal Reserve and the European Central Bank were xmmarkets.cnpletely reversed, and the 10-year U.S. Treasury yield rose to 4.3%. The negative cycle of "inflation rebound → monetary tightening → economic recession" suppresses risky currencies.
U.S. non-farm payrolls outlook, data fluctuation risks are high. March non-farm payrolls will be announced at 20:30 tonight, with an expected increase of 200,000 people and an unemployment rate of 3.8%. Data exceeds expectations → Strengthens the Fed’s hawkishness → The dollar surges; Weak data → Recession concerns rise → Risky currencies plummet, and foreign exchange market volatility will sharply amplify.
The yen is extremely weak, and the risk of intervention is high. The surge in oil prices has severely damaged Japan's trade balance, and the annual deficit may increase by 10 trillion yen. USD/JPY is approaching the 160 mark, and the Japanese authorities have escalated their verbal intervention. Sudden intervention will trigger a violent rebound of the yen, and the risk of a short stampede is extremely high.
The petrodollar system is shaken, and the U.S. dollar is a long-term concern. A Deutsche Bank report pointed out that the Hormuz crisis has shaken the two pillars of the petrodollar: the U.S. security umbrella has failed and waterway safety has been threatened. There are rumors in the market that the passage through the strait may be settled in RMB, and the emergence of "petro-yuan" will impact the reserve status of the US dollar, which will be negative for the US dollar in the long term.
3. A quick overview of the pros and cons of major currency pairs
U.S. dollar index (DXY)
Pros: Middle East risk aversion, maintenance of high interest rates, improvement in trade
Cons: stagflation recession, petrodollar fluctuations, non-agricultural non-agricultural products falling short of expectations
Today: 99.85, -0.12%
EUR/US D)
Pros: higher-than-expected inflation, hawkish ECB, economic resilience
Cons: energy dependence, geopolitical shock, recession risk
Today: 1.157, +0.35%
USD/JPY (USD/JPY)
Pros: U.S.-Japan interest rate differential, oil price shock, Japanese easing
Cons: intervention risk , the safe-haven nature of the yen, and inflation forcing interest rate hikes
Today: 151.6, -0.2%
GBP/USD (GBP/USD)
Pros: Strong British inflation, hawkish central bank
Cons: economic downturn, geopolitical shock, weak consumption
Today: 1.3215, -0.1%
USD/ RMB (USD/CNY)
Positive: USD strength, tariff expectations
Bad: Central parity protection, demand for exchange settlement, policy support
Today: central parity 6.8880
IV. Key reminders for today's trading
Europe and the United States are closed, liquidity is thin, and small funds can easily cause violent fluctuations. Strictly control positions and enlarge stop losses.
Night timeAgriculture is today's core risk point. We should reduce positions before the data and follow the trend after the data.
The yen is staring closely at the 160 mark, and the Japanese authorities may intervene at any time to avoid chasing short USD/JPY.
The situation in the Middle East is the X factor. The escalation of the military conflict between the United States and Iran will detonate the global foreign exchange market, and safe-haven currencies will strengthen instantly.
Disclaimer: This content is based on public information and does not constitute investment advice.
The above content is all about "[XM official website]: Collection of good and bad news affecting the foreign exchange market". It is carefully xmmarkets.cnpiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some contents in the article still need to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues:
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