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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 Platform】: 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. Macroeconomic data: Non-agricultural upset and euro zone confidence recovery
Soft US economic data dragged down the US dollar
The number of non-agricultural employment in the United States increased by only 73,000 in July, far lower than the expected 110,000, and the previous value was significantly lowered by 258,000. The unemployment rate rose to 4.2%, wage growth slowed to 3.2%, and market expectations for the Federal Reserve to cut interest rates increased. The US dollar index plummeted 1.36% in a single day to 98.67, the biggest drop in more than four months. Meanwhile, the revised monthly rate of factory orders in the United States fell by 1.5% in June, a decline of the second consecutive month, with weak demand for transportation equipment and capital goods exacerbating the manufacturing dilemma. The weak data is xm-forex.combined with the Trump administration imposing tariffs on 69 countries (35% in Canada and 50% in Brazil), and the market's concerns about a global recession have heated up, and the dollar's safe-haven attributes have weakened.
Eurozone Investor Confidence Improved Over Expected
Eurozone Sentix Investor Confidence Index rose from -19.5 to -8.1 in August, significantly better than the expected -12.5. The current situation index hits a new high since August 2024. Although inflationary pressures remain, the decline in energy prices and China's demand resilience (exports rose 8.6% year-on-year in June) boosted market sentiment. Technically, the euro is supported by the US dollar near 1.1150. If it stands firm at the 1.1200 mark, it may further challenge the 1.1250 resistance level.
2. Central Bank Policy: China's easing increases and the UK's interest rate cuts are implemented
The People's Bank of China releases liquidity favorable RMB
The People's Bank of China has made it clear that it will continue to implement moderately loose monetary policies in the second half of the year, lower the deposit reserve ratio and lower the policy interest rate, and at the same time accelerate the construction of the RMB offshore market and promote the formation ofStable liquidity supply channels. With policy support, the offshore RMB exchange rate against the US dollar rose slightly by 0.0144%, stabilizing around 6.98. In addition, eight departments issued the "Implementation Plan for Digital Transformation of the Machinery Industry", aiming to build 500 outstanding smart factories by 2030, which will benefit the attractiveness of RMB assets in the long run.
The Bank of England cut interest rates by 25 basis points and put pressure on the pound
The Bank of England announced that it would lower the benchmark interest rate from 4.5% to 4.25%, in line with market expectations, but the Monetary Policy xm-forex.committee voted in a rare 5:2:2 difference (5 people supported a 25 basis point cut, two people supported a 50 basis point cut, and two people supported maintaining interest rates). Although the central bank emphasizes the "gradual prudence" tone, the market expects to cut interest rates twice this year. The pound against the US dollar fell below the 1.33 mark in the short term, and the technical support level is 1.31. In addition, the United States imposed 10% tariffs on the UK (involving automobiles and agricultural products) further suppressed the rebound space of the British pound.
3. Geopolitics and trade frictions: tariff escalation and the situation in the Middle East
U.S. tariff policy triggered a chain reaction
The Trump administration imposed 10%-41% tariffs on 69 countries including Canada and Brazil officially came into effect. 35% of Canada's steel and 50% of Brazil's aluminum products were the first to be affected. Affected by this, the Canadian dollar fell to 1.3450 against the US dollar, a new low since December 2024; the Brazilian real depreciated by 1.2% to 4.95, and the pressure on capital outflows intensified. At the same time, China imposed a 10% tariff on imported goods originating from the United States (involving agricultural products and energy), and the RMB exchange rate fluctuation range expanded to 6.95-7.02.
Tension in the Middle East boosts safe-haven currencies
Israel launched air strikes on the Gaza Strip, killing more than 90 people. Gaza's health department said the conflict had killed 60,000 people. Shipping risks in the Strait of Hormuz have increased (affected 15-20% of global crude oil transportation), the US dollar rose to 101.50 against the yen in the short term, and gold broke through US$3,360 per ounce. In addition, Trump ordered nuclear submarines to be deployed in waters around Russia, exacerbating geopolitical tensions, and safe-haven currencies such as the Japanese yen and the Swiss franc were supported.
4. Market sentiment and technical aspects: volatility and changes in holdings of risk assets
Declining risk appetite suppresses xm-forex.commodity currencies
Global stock markets generally fell (Dow Jones fell 1.23%, German DAX fell 2.66%), and the selling wave of risk assets dragged down xm-forex.commodity currencies such as the Australian dollar and the Canadian dollar. WTI crude oil fell below $67 per barrel, Brent oil fell below $69, the Australian dollar fell to 0.6650 against the US dollar, and the Canadian dollar hit a 1.3450 low against the US dollar. CFTC holdings data show that the Australian dollar net short positions increased by 12% to 25%, and market sentiment turned cautious.
The US dollar rebounds in a technical xm-forex.competition with the euro's key positions
The US dollar index is supported near 98.50 (200-day moving average). If the rebound stabilizes at the 100 mark, it may challenge the 101 resistance level. Euro vs. USD at 1.1The range of 150-1.1200 fluctuates. If it falls below 1.1115, it may fall below 1.1080. The yen is limited to the Bank of Japan's easing policy and it is difficult to change the depreciation trend in the short term, but geopolitical risks may push it to rebound to 100.50.
5. Trading strategies and risk warnings
Key currency pair operation suggestions
Euro/USD: Light position and try long in the range of 1.1150-1.1200, stop loss 1.1115, target 1.1250; if it falls below 1.1115, you can chase short to 1.1080.
Pound against the US dollar: rebound to the 1.3300-1.3330 range, stop loss 1.3375, target 1.3150; if the Bank of England releases hawkish signals, it can go long with the backhand.
United States dollar against Japanese Yen: When geopolitical risks heat up, go long in the range of 101.00-101.30, stop loss at 100.80, and target at 101.80.
Risk hedging instrument
Option strategy: Buy the euro against the US dollar 1.12 call option (price 0.008) to hedge the upward risk, and sell 1.11 put option (price 0.005) to reduce costs and build a risk reversal xm-forex.combination.
Position management: After the non-agricultural data is released, it is recommended that the total position be controlled within 40% to avoid excessive leverage.
6. Medium- and long-term trend outlook
From the weekly level, the US dollar index fluctuates between 98.50 and 101.00, and the direction of the breakthrough depends on the time when the Federal Reserve's policy shifts and the evolution of geopolitical risks. The euro-dollar medium-term support is 1.10. If OPEC+ production increase is xm-forex.combined with the European recession, it may fall to 1.08; if China's demand exceeds expectations, it is expected to rebound to 1.14. The yen needs to pay attention to the Bank of Japan's policy adjustment signals. If the expectation of interest rate hikes heats up this year, it may rebound to 98.00.
Conclusion: On August 4, the foreign exchange market will focus on the Bank of England policy differences, the US tariff chain reaction and the evolution of the situation in the Middle East. The short-term technical rebound of the US dollar has a hedge against the recovery of confidence in the euro zone, and currencies such as the pound and the Canadian dollar are under significant pressure due to tariffs. Investors need to pay close attention to breakthroughs at key points such as 1.1150 (Euro/USD), 1.3300 (GBP/USD), 101.00 (USD/JPY), and flexibly adjust strategies based on changes in positions and policy signals, and at the same time make preparations for hedging geopolitical risks.
The above content is all about "【XM Foreign Exchange Platform】: Collection of positive and negative news that affects the foreign exchange market". It was carefully xm-forex.compiled 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 content in the article still needs 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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