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When "safe-haven assets" are difficult to protect themselves, how can bond market fluctuations rewrite the trading logic of the foreign exchange market?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: When "help-haven assets" are difficult to protect themselves, how can the fluctuations in the bond market rewrite the trading logic of the foreign exchange market?" Hope it will be helpful to you! The original content is as follows:
On Wednesday (September 3), the global financial markets remained filled with a prudent atmosphere, especially in the context of continued high long-term bond yields. Although the recent wave of bond selling has cooled, market participants remain highly vigilant about the high debt levels and potential fiscal risks of various countries, and this sentiment is profoundly affecting the direction of the foreign exchange market.
Market Macro Environment and Fundamental Analysis
The latest quotation of the US dollar index is 98.2710, a slight decline of 0.03% during the day. Meanwhile, the euro was quoted at 1.1653 against the US dollar, up 0.15% during the day. This slight reverse change is not accidental, it deeply reflects the core contradiction in the current market: the drastic fluctuations in long-term bond yields in major economies around the world.
Long-term government bond yields, from Japan to the UK, have generally hit years of highs, behind which are investors' concerns about high-debt economies. As a well-known head of fixed income research in institutions said, the demand for ultra-long-term bonds by institutional investors has weakened significantly, which has exacerbated the fragility of the market.
Specifically, the UK's 30-year Treasury yield hit a new high since 1998, followed by a decline in the pound, reflecting the market's concerns about the UK's high borrowing levels and slowing economic growth. Similarly, the U.S. 30-year Treasury yield hit a key psychological threshold of 5% for the first time since mid-July, while the German Treasury yield also rose to its high since 2011. Together, these phenomena point to a core issue: Investors are reevaluating the risk premium of sovereign debt in countries.
On the news side, the political dynamics of various countries have also added uncertainty to the market. The British Prime Minister's Cabinet ReorganizationAnd market speculation about future tax increases may curb economic activity. The French Prime Minister's vote of confidence and the rumors that the Japanese Prime Minister may step down due to an election defeat have all exacerbated the market's risk aversion. These political risks and fiscal difficulties are intertwined, and together they constitute the main driving force behind pressure on the bond market.
It is worth noting that although the large-scale bond issuance on Tuesday puts pressure on the market, eurozone bond yields fell during trading on Wednesday, and long-term yields in the United States and the United Kingdom also pulled back from highs. However, this is just surface calm. A portfolio manager noted that market participants are once again focusing on fiscal deficits and political risks, a theme that is likely to continue to ferment during the year.
Looking ahead with the future market, the upcoming U.S. employment data will become the focus. If non-farm employment data are stronger than expected, market expectations of the Fed's interest rate cut will have to be reversed, which will support the dollar, said a head of forex and interest rate research at a well-known institution. Conversely, if the data is weak, it could trigger a widespread rebound in the bond market, which could potentially lower the dollar.
Technical analysis and market interpretation
From a technical perspective, the trends of the US dollar index and the euro-dollar are forming a subtle resonance with the fundamentals.
The US dollar index is on the 60-minute chart and is currently quoted at 98.2710. From the perspective of the moving average system, the 10-day moving average (98.3551) and the 20-day moving average (98.3598) are still above the current price, suppressing the index, and the distance between the two is very close, showing the balance of long-short forces of the short-term moving average. The 50-day moving average (98.0974) is located below the current price, providing the index with support below. This shows that although the US dollar has been under pressure recently, the support below is still relatively stable and may fall into range fluctuations in the short term. In terms of MACD indicators, DIFF (0.0417) and DEA (0.0780) are both above the zero axis, but the DIF line has penetrated DEA downward, forming a dead cross, indicating that the short-term kinetic energy has weakened.
Euro vs. USD is on the 60-minute chart, with the latest quote of 1.1653. The trend is opposite to the US dollar index. The 10-day moving average (1.1641) and the 20-day moving average (1.1638) have both crossed below the 50-day moving average (1.1666), forming a short-term golden cross pattern, showing a certain upward momentum. Although the 50-day moving average (1.1666) still forms short-term resistance above the current price, the long force of the euro is accumulating. In terms of MACD indicators, DIFF (0.0003) and DEA (0.0008) are both above the zero axis, and the DIF line is about to penetrate DEA, forming a golden cross, further supporting the short-term upward momentum of the euro.
Future trend outlook
In summary, the turmoil in the global bond market is the main driving force for current foreign exchange market volatility. The short-term trend of the dollar will continue to be affected by yield volatility and upcoming U.S. employment data. On the technical side, the US dollar index still faces short-term resistance under the pressure of moving averages, but the support below is still strong, indicating thatIts downward space is limited. The euro and the U.S. dollar have shown a certain upward momentum, but they still need to break through key technical resistance levels.
In the future, the market focus will continue to focus on fiscal policies, economic data and political risks of various countries. If the selling sentiment in the bond market heats up again, or if the key economic data exceeds expectations, it may trigger violent fluctuations in the foreign exchange market. Senior traders need to pay close attention to these macro variables, www.xmniubi.combine technical analysis, and dynamically adjust trading strategies to deal with any possible turning points in the market. On Wednesday (September 3), the global financial markets remained cautious, especially in the context of continued high long-term bond yields. Although the recent wave of bond selling has cooled, market participants remain highly vigilant about the high debt levels and potential fiscal risks of various countries, and this sentiment is profoundly affecting the direction of the foreign exchange market.
Market Macro Environment and Fundamental Analysis
The latest quotation of the US dollar index is 98.2710, a slight decline of 0.03% during the day. Meanwhile, the euro was quoted at 1.1653 against the US dollar, up 0.15% during the day. This slight reverse change is not accidental, it deeply reflects the core contradiction in the current market: the drastic fluctuations in long-term bond yields in major economies around the world.
Long-term government bond yields, from Japan to the UK, have generally hit years of highs, behind which are investors' concerns about high-debt economies. As a well-known head of fixed income research in institutions said, the demand for ultra-long-term bonds by institutional investors has weakened significantly, which has exacerbated the fragility of the market.
Specifically, the UK's 30-year Treasury yield hit a new high since 1998, followed by a decline in the pound, reflecting the market's concerns about the UK's high borrowing levels and slowing economic growth. Similarly, the U.S. 30-year Treasury yield hit a key psychological threshold of 5% for the first time since mid-July, while the German Treasury yield also rose to its high since 2011. Together, these phenomena point to a core issue: Investors are reevaluating the risk premium of sovereign debt in countries.
On the news side, the political dynamics of various countries have also added uncertainty to the market. The restructuring of the British Prime Minister's cabinet and market speculation about future tax increases may curb economic activity. The French Prime Minister's vote of confidence and the rumors that the Japanese Prime Minister may step down due to an election defeat have all exacerbated the market's risk aversion. These political risks and fiscal difficulties are intertwined, and together they constitute the main driving force behind pressure on the bond market.
It is worth noting that although the large-scale bond issuance on Tuesday puts pressure on the market, eurozone bond yields fell during trading on Wednesday, and long-term yields in the United States and the United Kingdom also pulled back from highs. However, this is just surface calm. A portfolio manager noted that market participants are once again focusing on fiscal deficits and political risks, a theme that is likely to continue to ferment during the year.
Looking ahead with the future market, the upcoming U.S. employment data will become the focus. The director of forex and interest rate research at a well-known institution said that ifNon-farm employment data are stronger than expected, and market expectations of the Fed's interest rate cut will have to be reversed, which will support the US dollar. Conversely, if the data is weak, it could trigger a widespread rebound in the bond market, which could potentially lower the dollar.
Technical analysis and market interpretation
From a technical perspective, the trends of the US dollar index and the euro-dollar are forming a subtle resonance with the fundamentals.
The US dollar index is on the 60-minute chart and is currently quoted at 98.2710. From the perspective of the moving average system, the 10-day moving average (98.3551) and the 20-day moving average (98.3598) are still above the current price, suppressing the index, and the distance between the two is very close, showing the balance of long-short forces of the short-term moving average. The 50-day moving average (98.0974) is located below the current price, providing the index with support below. This shows that although the US dollar has been under pressure recently, the support below is still relatively stable and may fall into range fluctuations in the short term. In terms of MACD indicators, DIFF (0.0417) and DEA (0.0780) are both above the zero axis, but the DIF line has penetrated DEA downward, forming a dead cross, indicating that the short-term kinetic energy has weakened.
Euro vs. USD is on the 60-minute chart, with the latest quote of 1.1653. The trend is opposite to the US dollar index. The 10-day moving average (1.1641) and the 20-day moving average (1.1638) have both crossed below the 50-day moving average (1.1666), forming a short-term golden cross pattern, showing a certain upward momentum. Although the 50-day moving average (1.1666) still forms short-term resistance above the current price, the long force of the euro is accumulating. In terms of MACD indicators, DIFF (0.0003) and DEA (0.0008) are both above the zero axis, and the DIF line is about to penetrate DEA, forming a golden cross, further supporting the short-term upward momentum of the euro.
Future trend outlook
In summary, the turmoil in the global bond market is the main driving force for current foreign exchange market volatility. The short-term trend of the dollar will continue to be affected by yield volatility and upcoming U.S. employment data. On the technical side, the US dollar index still faces short-term resistance under the pressure of moving averages, but the support below is still strong, indicating that its downside space is limited. The euro and the U.S. dollar have shown a certain upward momentum, but they still need to break through key technical resistance levels.
In the future, the market focus will continue to focus on fiscal policies, economic data and political risks of various countries. If the selling sentiment in the bond market heats up again, or if the key economic data exceeds expectations, it may trigger violent fluctuations in the foreign exchange market. Senior traders need to pay close attention to these macro variables, www.xmniubi.combine technical analysis, and dynamically adjust trading strategies to deal with any possible turning points in the market.
The above content is all about "[XM Foreign Exchange Platform]: When "help-haven assets" are difficult to protect themselves, how can the bond market fluctuations rewritten the trading logic of the foreign exchange market?" It is carefully www.xmniubi.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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