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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The risk of the government shutdown suppresses the market, and the US dollar index falls below the 50-day moving average." Hope it will be www.xm-bx.comful to you! The original content is as follows:
On the Asian session on Tuesday, the US dollar index remained volatile, and the US dollar fell against major currencies such as the euro and the yen on Monday, after strengthening last week due to stronger than expected US economic data. The market is waiting for the key non-farm employment report released this week to find more clues to the Fed's policy path.
U.S. dollar: As of press time, the U.S. dollar index hovers around 97.97. The U.S. dollar usually weakens before the government shutdown, but it often rebounds once the problem is resolved. However, the situation is special, and market pricing faces greater risks: if the shutdown lasts for a longer period of time, it may lead to delays in the release of key economic data, including Friday's non-farm employment report - which is expected to show 59,000 new jobs and an unemployment rate of 4.3%. Technically, late last week, the US dollar failed to hold the critical retracement range of 98.238-98.714, and then the rise was weak and currently faced a key technical www.xm-bx.com level of 97.412 - a 50% retracement level of the recent 96.218-98.605 range. If it falls below 97.199, a short-term trend reversal will be confirmed, causing the index to enter a bearish pattern.
On September 29, local time, US President Trump met with leaders of the two houses at the White House to discuss avoiding the government shutdown. Senate Democratic leader Chuck Schumer said there was a huge disagreement between them and Trump had heard their objections. Schumer said whether the government is in a shutdown is decided by the Republican Party. House Democratic leader Hakeem Jeffries said it was a candid discussion that Democrats would not www.xm-bx.com the Republican bill that harms health care. House Speaker Johnson said he hoped to leave more time for negotiations. Vice President Vance said the talks with leaders of the two houses were "candid" and the federal government should not be shut down due to differences.
Fed Williams said on Monday that initial signs of weak labor market prompted him.Supported rate cuts at the latest Fed meeting. "It makes sense to lower interest rates slightly" and "moderately relax some tightening measures" will www.xm-bx.com boost the job market and put some downward pressure on the still-high inflation levels. Additionally, he said his model estimates for real neutral rates at 0.75%, but added that neutral rates are important, but policies are data-driven.
According to the Financial Times, the Swiss National Bank and the U.S. Treasury issued a statement on Monday, formally unified their positions on foreign exchange issues, and both sides promise not to "manipulate exchange rates for www.xm-bx.competition purposes." The statement also acknowledged that market intervention is still an effective tool to deal with exchange rate fluctuations or “disorder” trends. Lee Hardman, foreign exchange strategist at Mitsubishi UF, said, "This shows that the United States recognizes the right to intervene. Therefore, this can be seen as a green light for another move (intervention) in the future." Before the statement was released, Switzerland had long had friction with the United States due to its monetary intervention policy.
The US Bureau of Labor Statistics has just released a government shutdown emergency plan, and will suspend all operations during the government shutdown and will not release economic data. Currently, U.S. Congressmen are inclined to force the federal government to shut down, which may leave policymakers, business leaders and investors without access to the key data needed to assess the U.S. economy. Stephen Stanley, chief economist of the U.S. capital markets at Santander, said the next Fed meeting will be held from October 28 to 29, and it will be difficult to justify another rate cut without the latest government data. Some officials have been cautious about this and hope to see more data. Neil Bradley, chief policy officer of the U.S. Chamber of www.xm-bx.commerce, said the government shutdown will not push the U.S. economy into a recession, but it will pay the price and increase uncertainty that businesses and business leaders are already dealing with.
Capitol Macro analyst Andrew Kenningham wrote that weak economic growth could force the ECB to change its "comfort zone of policy stance." ECB President Lagarde once said that the bank's policy position is in a "good state" as interest rates remain at 2% in the past few months and inflation stabilizes near central bank targets. But Kenningham said that this view is acceptable as the euro zone grows next year, especially in Germany, the most important economy in Europe. It can change. Meanwhile, he believes inflation may be lower than the central bank's expected target. Therefore, Kenningham predicts that the ECB may cut interest rates twice next year, 25 basis points each time.
www.xm-bx.commerzbank analyst Michael Pfister pointed out in a report that given the threat of Fed independence and the weak economic outlook, the dollar may find it difficult to achieve a meaningful recovery. He believes that despite the White House's "unstable trade policy", the foreign exchange market does not seem to expect the dollar to perform in the second term of US President Trump in any significant difference from the first term. The dollar appreciates significantly after Trump's first term fell to the bottom. Pfister said: "This time, considering the attack on the Fed and the weakening of the real economy, this recovery may be more difficult. ”
Mitsubishi UF Bank analyst Lee Harderman pointed out in a report that if Koizumiro becomes the next president of Japan's ruling Liberal Democratic Party, the yen may benefit. He said: "We predict that the Bank of Japan will resume interest rate hikes as early as October's policy meeting, which is based on the view that Koizumiro won the Liberal Democratic Party presidential election. "He believes that the reduction of political uncertainty should give the Bank of Japan greater confidence to resume interest rate hikes.
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