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US index fluctuates and waits for CPI to break through, investment banks bet on data to help break through weekly resistance
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Hello everyone, today XM Foreign Exchange will bring you "[XM Group]: The US index fluctuates and waits for CPI to break through, and investment banks bet on data to help break through weekly resistance." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
On Tuesday, as Sino-US trade negotiations entered the second day, the US dollar index fluctuated around the 99 mark. As of now, the US dollar price is 99.11.
Tariffs—Source: India and the United States are expected to reach a temporary trade agreement by the end of the month, and the United States and Mexico are close to reaching an agreement on steel import tariffs.
Trump: The riots in Los Angeles were a "foreign invasion." The US judge rejected California's request to immediately prevent the Trump administration from sending troops to the state.
Russian Ambassador to the United States: A new round of talks between Russia and the United States will be held in Moscow in the near future. The United Kingdom and five other countries have announced sanctions on two Israeli far-right ministers.
White House Treasury Secretary Bescent is the candidate for the next Federal Reserve Chairman.
The UK's employment number hit the biggest drop since 2020 in May, with traders fully pricing the Bank of England cutting interest rates twice this year.
Blackstone Group plans to invest $500 billion in Europe over the next decade.
Summary of institutional views
Analyst David Scutt: Directional risks in the United States and Japan are rising
Japan wholesale inflation eased in May, indicating that upstream price pressure is weakening and may eventually be transmitted to the consumer level. While this may keep Bank of Japan officials cautious about further rate hikes, the U.S. and Japan trend today may depend on MayThe specific content of the US CPI data.
Technically, at the beginning of this week, the United States and Japan broke through the downward trend line since the May high, but failed to continue the rise and encountered shorts above 145. However, as prices remain above the 50-day moving average and the momentum indicator changes from neutral to slightly bullish, the possibility of an uptrend is more attractive than a week ago. For investors who are considering going long, buying on dips to below the 50-day moving average or setting a stop loss at 144 is a good choice, and you can set your target at 145.3 (Tuesday intraday high) or 146 based on the expected risk-return level.
If the United States and Japan break through 145.3, other choices will be made based on the price trend. Break through this level, you can establish a long position and set a narrow stop loss below, with the target level of 146. However, if the price cannot effectively break 145.3, a reversal strategy can be adopted to establish a short position below. The 50-day moving average or 144 support are potential targets.
Bank: The US economy "barely passes the mark", and the narrative in the future will shift from recession to...
The weak data from the United States since May has met our expectations of "barely pass the mark". We expect U.S. economic activity to slow down in the second and third quarters, and ultimately demand growth will be at zero/slightly negative. The question is whether this indicates a more severe recession. We don't think so. Strong revenue growth should support spending, and large-scale layoffs appear unlikely under the upcoming tax cuts.
If there is a recession, it is likely to start within the next three to five months. The next few employment reports will be crucial. Given the possible disruption of labor supply, the unemployment rate should be more important than the number of people employed. We will also focus on retail sales data and PCE. Although we expect consumption to drop slightly in May and June. But if spending remains at April levels at the end of the second quarter, quarter growth will reach a strong 2.5%. If the economy can survive the xm-forex.coming months, the market narrative may turn to reinflation.
The U.S. May CPI data released this week may only show a moderate tariff effect, but the tariff collection volume rose sharply in May, indicating significant inflation will occur in the summer. If the prediction is accurate, the year-on-year growth rate may rise rapidly due to the favorable base effect. Recent Fed remarks have shown that the Fed is highly concerned about the risk of tariffs that may lead to sustained inflation shocks. These risks may become the focus of market attention in the fall. But first, the economy needs to have a challenging summer.
JPMorgan Chase’s forward-looking CPI: Changes in energy and food prices are hidden in this clue
Overall CPI annual rate: 2.4%, overall CPI monthly rate: 0.16%; core CPI annual rate: 2.9%, core CPI monthly rate: 0.31%
We expect the overall CPI monthly rate of the United States to rise by 0.2% in May. The gains are roughly the same as in April, and although there may be more signs that the pressure on tariff costs is being passed on, the impact of tariffs is expected to be inIt will be more obvious in the xm-forex.coming months. Energy prices should continue to put some downward pressure on the monthly changes in the overall CPI, down 1.8% in May, as gasoline prices in CPI fell by about 2.8% (seasonally adjusted; gas station prices were slightly below -1% last month); other fuel prices may also fall month-on-month.
At the same time, we expect food prices to rebound moderately after a slight decline in April. While egg prices continued to fall sharply in May (a big reason for the weak price in April), other food prices generally rose last month. If our forecasts xm-forex.come true, the overall CPI will rise by 2.5% over the past year, slightly faster than the previous two months, but still significantly lower than any period since the beginning of 2021.
Morgan Stanley: The dollar is expected to fall nearly 10%, maintain long euros, with targets and stop losses in...
We expect the dollar to continue to fall nearly 10% in the next year, with the dollar falling most significantly against safe-haven currencies (Euro, Japanese Yen and Swiss franc). This is driven by fundamental and technical factors. From a fundamental perspective, we expect the slowdown in US economic growth will be significantly higher than the rest of the world and exceed the general market expectations, while the interest rate spreads in the United States will narrow significantly. From a technical perspective, we believe that the dollar's discount to fundamentals will expand, which is not only due to the influx of foreign exchange hedging funds, but also due to the ongoing debate over the dollar's safe-haven status. If the US dollar remains positively correlated with the stock market, or the Fed cuts rate and amplitude faster than expected, or foreign exchange volatility increases, the influx of foreign exchange hedging funds may be more significant and longer lasting.
The main risk of the weak dollar argument xm-forex.comes from the United States. If the U.S. economic growth is strong and policy uncertainty is reduced, thus enhancing the U.S. position as an investment destination, it may reignite the bullish position in the U.S. dollar. In addition, the increasing slowdown in overseas economics may also make it relatively unattractive. Overall, we remained long at 1.1358 Euro/USD, with a target price of 1.20 and a stop loss of 1.07.
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