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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 Official Website】: 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:
In the changing pattern of the foreign exchange market, the daily news face is like a baton, leading the ups and downs of the exchange rate. For foreign exchange trading on September 1, sorting out and interpreting the key positive and negative news in the near future is an important prerequisite for understanding the pulse of the market and formulating accurate strategies.
1. Good news
(I) Expectations of Fed rate cuts have heated up
Feder Chairman Powell hinted at the Jackson Hall Global Central Bank annual meeting that interest rate cuts may be cut in the next few months, and this dovish signal quickly touched the hearts of the market. The market's expectations for the Federal Reserve's 25 basis points cut rate in September soared sharply, once as high as 91%. As expectations of interest rate cuts fermented, the US dollar index suffered a heavy blow, falling 0.8% in a single day on August 22. The rise in interest rate cut expectations means that the returns on holding US dollar assets have declined relatively, and funds tend to flow out of US dollar assets, seeking other more attractive investment targets, which undoubtedly opens up the way for the appreciation of non-US currencies. For example, historical data shows that before the Federal Reserve starts a cycle of interest rate cuts, non-US currencies often usher in appreciation in advance. Currencies such as the euro, pound, and Australian dollar have all experienced a temporary appreciation trend under similar circumstances.
(II) Strong performance of the RMB exchange rate
The recent rise in the RMB exchange rate is like a rainbow. On August 25, the RMB mid-price against the US dollar rose by 160 basis points to 7.1161 yuan, a new high since November 2024; on the evening of August 28, the offshore RMB exchange rate suddenly rose, once rising above 7.12, setting a new high in the past nine months. Behind the strengthening of the RMB exchange rate is the coordinated force of internal and external factors. Internally, China's economic growth trend is stable, the foreign trade situation is improving, and the trade surplus remains high, which has enhanced the market's confidence in the RMB.;Outside, the Federal Reserve's policy shifted and the US dollar index weakened, providing external space for the appreciation of the RMB. The strong performance of the RMB not only boosted the market's overall confidence in emerging market currencies, but also prompted investors to re-examine the allocation value of RMB assets, further attract foreign capital inflows, and promote the rise of the RMB exchange rate in the foreign exchange market.
(III) Foreign capital increases its holdings of domestic assets
Data from the State Administration of Foreign Exchange shows that the scale of foreign capital increases its holdings of domestic stocks further increased www.xmniubi.compared with last month. Taking Hong Kong stocks as an example, data from the Hong Kong Stock Exchange shows that foreign institutions such as JPMorgan Chase, Citigroup, and Morgan Stanley increased their holdings in H shares such as CATL, ZTE, and WuXi AppTec from August 21 to 26. A large amount of foreign capital has poured into the domestic asset market, increasing demand for the RMB. On the one hand, foreign capital needs to convert it into RMB first when purchasing domestic stocks and other assets, which directly enhances the buying power of the RMB in the foreign exchange market; on the other hand, the continuous inflow of foreign capital has released a signal of optimistic prospects for China's economic prospects, attracting more international funds to pay attention to the Chinese market, further stabilizing the strong foundation of the RMB exchange rate, and also having a positive radiation effect on other emerging market currencies.
2. Bad news
(I) Global economic growth slows down
International organizations such as the International Monetary Fund (IMF) and the World Bank have lowered their global economic growth expectations. Global trade protectionism is on the rise, and the Trump administration's tariff policies have seriously hindered global economic growth. High tariffs have curbed international trade activities, slowing economic growth in countries that rely on exports, which in turn caused the currencies of these countries to be under depreciation pressure in the foreign exchange market. For example, currencies of emerging market countries, such as Brazilian real and South African rand, are facing difficulties in capital outflows and exchange rate depreciation due to slowing global economic growth and restricted exports. The market's confidence in its currency has been set, and the selling power in foreign exchange transactions has increased.
(II) Geopolitical risks intensify
The Russian-Ukrainian conflict continues to escalate, and the scope of military confrontation between the two sides continues to expand, bringing great uncertainty to the global geopolitical pattern. The intensification of geopolitical tensions has prompted investors to experience risk aversion sharply, and they are seeking safe-haven assets, such as the US dollar, yen, gold, etc. Driven by the demand for hedging, funds withdraw from risky assets and flow to hedging currencies, resulting in a decline in the exchange rate of non-hedging currencies. Taking the euro as an example, the European region is closely linked to Russia's economy. The escalation of the conflict between Russia and Ukraine has caused Europe to face problems such as energy supply risks and economic growth hindered. The euro continues to be under pressure in the foreign exchange market, exchange rate fluctuations are intensifying and the overall downward trend is on the rise.
(III) Uncertainty in the trade situation
The Trump administration’s policy of imposing 50% tariffs on India has cast new variables on the global trade situation. As an important emerging economy, India occupies a certain position in the global trading system. The significant increase in tariffs may affect its trade balance, which will in turn have a negative impact on the Indian rupee exchange rate. At the same time, this policy may alsoIt triggered a chain reaction in other countries and disrupted the global trade order, making the market worried about the prospects of emerging market currencies and developed countries that rely on trade, increasing the instability of foreign exchange markets and interfering with the normal pricing mechanism of exchange rates.
The foreign exchange market faced a www.xmniubi.complex news environment on September 1, with positive and negative factors intertwined. Investors need to pay close attention to the dynamic evolution of these messages and their specific impact on different currency pairs, and carefully develop trading strategies to deal with market uncertainty.
The above content is all about "【XM official website】: Collection of positive and negative news that affects the foreign exchange market". It was carefully www.xmniubi.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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