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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Market 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:
U.S. employment data exceeds expectations: The U.S. Department of Labor released its April non-farm employment report on the same day, with 286,000 new jobs, far exceeding the expected 200,000, and the unemployment rate remained at a low of 3.8%. Data strengthened the Fed's position to maintain high interest rates, and the US dollar index rose 0.8% in the short term, approaching the 106 mark.
Eurozone inflation cooled: Germany's CPI rose 2.4% year-on-year in April, hitting a new low since May 2023, alleviating the pressure on the ECB to raise interest rates. The euro/dollar exchange rate rebounded to 1.0850 at one point, but the gains were restrained by Italian political turmoil.
Bank of Japan reduces bond purchases: The Bank of Japan announced that it would reduce the monthly Treasury bond purchase volume from 6 trillion yen to 5.5 trillion yen, suggesting that exiting the easing policy may be advanced, the yen strengthens rapidly, and the US dollar/yen falls below 150.
China's economic data was weak: China's GDP grew by 5.2% year-on-year in the first quarter. Although it was in line with expectations, the manufacturing PMI fell to 49.2 in April, returning to the contraction range, and the offshore RMB fell to the 7.25 mark against the US dollar.
UK retail sales plummeted: UK retail sales fell 1.8% month-on-month in March, the biggest drop since October 2023, with the pound/dollar losing 1.26 support.
Canada's trade deficit widened: Canada's trade deficit reached 11.4 billion Canadian dollars in March, far exceeding expectations, and the Canadian dollar fell to 1.3850 against the US dollar, a new low this year.
Feder Vice Chairman Brainard emphasized in his speech that "we need to be wary of the risk of inflation rebound". The market's bet on a 25 basis point rate hike in June rose to 35%, and the US dollar index has benefited from strengthening.
Emergency market currencies: offshore RMB, Indian rupee, etc. are under pressure, and the Korean won fell below the psychological threshold of 1,400 against the US dollar.
Bank Bank Governor Nager advocates continuing interest rate hikes, while Spanish Bank Governor De Kos called for "suspending interest rate hikes to observe economic data." Eurozone currency market pricing shows that the rate cut may expand to 100 basis points this year, and the euro is under pressure in the medium term.
Japanese Ministry of Finance Officials hinted that "it is ready to deal with excessive fluctuations in the yen". If the US dollar/yen breaks through 155, it may trigger a new round of foreign exchange intervention. However, the market believes that the probability of intervention in the short term is low, and the yen arbitrage transaction is active.
The situation in the Middle East escalates: Iran-backed Houthi attacks Saudi oil transfer facilities in eastern Saudi Arabia, Brent crude oil jumps 4%, safe-haven buying pours into the US dollar, and high-risk currencies such as the Australian dollar and New Zealand dollar fall.
The stalemate of the Russian-Ukrainian conflict: NATO announced an additional 20 billion euros of military aid to Ukraine, the ruble fell to the 102 mark against the US dollar, and the Russian central bank urgently raised interest rates by 50 basis points to stabilize the exchange rate.
U.S. primary election disturbance: Republican Party Candidate Trump's poll approval rating has risen, and his remarks on "inflated tariffs on China" triggered expectations of RMB depreciation, and the offshore RMB volatility soared to the high of the year.
U.S. dollar index: daily line stands firm at 105.5 key support, MACD golden cross continues, with the above target of 107.5 (2024 high).
Euro/USD: falls below 1.08 key level, if it effectively breaks below 1.0750, it may open up the space to fall to 1.06.
U.S. dollar/Yen: blocked by 150.5 resistance, but if it breaks through, it will accelerate to reach 152-153 range.
Fund flow: According to CFTC data, as of April 11 In the week of the day, net long positions in the US dollar increased to US$28 billion, a new high since November 2023.
Short-term positive factors: US economy resilience, Federal Reserve hawkish stance, and geopolitical risk aversion demand to support the US dollar; the Bank of Japan reduces bond purchases to positively rebound the yen in a phased rebound.
Short-term negative factors: China's economic recovery is weak, European political risks, and pressure to sell currencies in emerging markets.
Goldman Sachs maintains the US dollar's "tactical long" rating and recommends increasing holdings of US dollar/JPY at lows.
Morgan Stanley warns that "the risk of recession in the euro zone is underestimated" and bears the euro/US dollar to 1.05.
Short-term traders can pay attention to the long-term opportunities after the US dollar/yen breaks through 150.5, and the stop loss is set at 149.8.
Europe bulls need to wait for the stabilization signal below 1.07, and mid-term investors can place short positions in euros at highs.
The RMB exchange rate fluctuations are intensifying, and enterprises need to strengthen exchange rate hedging to avoid unilateral bets.
The above content is all about "【XM Foreign Exchange Market Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It 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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