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US dollar index rises slightly, pay attention to G7 Finance Ministers and Central Bank Governors Meeting
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The US dollar index rose slightly, pay attention to the G7 Finance Ministers and the Governors' Meeting". Hope it will be helpful to you! The original content is as follows:
On Tuesday, the US dollar index rose slightly, and this trading day will usher in the RBA interest rate resolution. The market generally expects the RBA to cut interest rates by 25 basis points to 3.85%; in addition, a meeting of G7 Finance Ministers and Central Bank Governors was held, and investors need to pay attention to it by May 22. U.S. President Trump will also participate in Congress on Tuesday's discussion of his xmserving.comprehensive tax cut bill, as Republicans only hold a slim majority in the House of Representatives and will personally supervise the army to avoid misses in a key vote later this week. Investors need to pay attention.
Analysis of major currencies
Dollar: As of press time, the US dollar index hovered around 100.41, and the market responded to the news that Trump announced the resumption of ceasefire negotiations between Russia and Ukraine. As Fed officials remain cautious and call for more clarity before xmserving.committing to policy changes, DXY has struggled to find the upward action energy. Technically, the relative strength index (RSI) is around 40 and the xmserving.commodity channel index (CCI) is also around 40, both indicating neutral momentum, while the moving average convergence/divergence (MACD) shows a slight buy signal. Momentum (10) hovers around zero, leaning towards bearishness. The 20-day simple moving average (SMA) supports the buying bias, but the 100-day and 200-day simple moving averages, as well as the 10-day index moving average (EMA) and the 10-day simple moving average are pointing to long-term selling signals. Resistance is at 100.30, 100.57 and 100.58, and key support is at 100.10 and 99.94.
1. Bank of England member Dingla said that she supported the 50 basis point rate cut in order to make a statement on the direction of the economy.
Bank of England Monetary Policy xmserving.committee (MPC) member Dingla said on Monday that she decided to vote for the 50 basis point rate cut in the central bank's recent interest rate resolution to make a statement on the direction of the UK economy. “If I continue to cut interest rates by 100 basis points, I don’t think it will have that much impact on the financial market’s perception of interest rate cuts,” Dingla added. “I don’t think it’s as strong as I’m cautious about using rate cuts, and that’s why I chose to do that.” On May 8, the Bank of England cut the benchmark bank rate by 25 basis points. Dingla is one of two members of the Monetary Policy xmserving.committee who voted for a larger 50 basis point cut, the other is Taylor. Dingra also attributed the vote to her broader view of long-term interest rate levels on Monday.
2. Fed Logan: The Fed should strengthen interest rate control mechanism
Dallas Fed Chairman Logan said the Fed should consider strengthening mechanisms to more effectively prevent money market interest rates from soaring when markets appear. In a speech prepared by the Atlanta Fed's 2025 Financial Markets Conference, Logan once again called for more banks to use discount windows and centralize liquidation of permanent repurchase tools (SRF) operations. Logan also noted that the Fed should focus on broader market rates, rather than just federal funds rates. “In my opinion, interest rate control is more than just keeping the federal funds rate within the target range,” she said.
3. Fed Vice Chairman Jefferson: When formulating policies, Moody's downgrade of rating will be regarded as ordinary data.
Feder Vice Chairman Jefferson said that when formulating monetary policy, Moody's downgrade of the US credit rating will be regarded as ordinary economic data. Jefferson said, "We will look at this rating downgrade from the perspective of all the upcoming information: what this means in terms of achieving our established goals, and not xmserving.comment on what the rating downgrade may mean in the political and economic context." He also said, "Our goal is to fulfill our dual mission - to achieve maximum employment and price stability. It is especially important to stay focused on our mission during a period of changes in financial markets."
4. The first bilateral summit after Brexit Britain and Europe reached a security and defense agreement
On the 19th local time, European xmserving.commission President von der Leyen said at a joint press conference with European Council President Costa and British Prime Minister Stamer that the EU and the UK have reached a fishery agreement valid until 2036. Meanwhile, the two sides have reached a security and defense agreement to strengthen joint security operations and share information. Von der Leyen said this is a new chapter in the EU-UK partnership, a new starting point for the security and defense partnership between the two sides, and a first step for Britain to participate in the EU's defense industry. On May 19 local time, the UK and the EU held their first bilateral summit since the UK officially "Brexit".
5. Fed Bostic warned about inflation, expecting only one rate cut this year
Feder Bostic said in an interview with xmserving.comBC that he is still worried about inflation caused by tariffs, but is still expected to cut interest rates by 25 basis points this year. He said the number of interest rate cuts will depend on how things go, and the details of the tariffs will certainly be important. Bostic said he saw inflation drop to the Fed's 2.0% target, but that "takes longer." Given the current household balance sheet status and recent inflation, it is unclear whether U.S. consumers can withstand the full impact of tariffs. Regarding Moody's downgrade of the U.S. credit rating, Bostic said that the Federal Reserve will have to wait to see the impact of the rating downgrade on U.S. debt demand. The Federal Reserve will also have to be sure of the impact of the rating downgrade on the outlook, which is changing.
Institutional View
1. Barclays: Under weak economic activity data, the UKThe Bank of England may cut interest rates in June
Barclays UK interest rate strategist Moyeen Islam said that the Bank of England may cut interest rates in June as UK economic activity data gradually weakens. Islam said UK economic activity data "often below Bank of England's expectations", which increased the likelihood of a rate cut in June. The UK's three-month wage growth figure for March last week fell to 5.6% from 5.9% the previous month. The focus is on the UK inflation data scheduled for Wednesday. According to LSEG data, the money market currently expects the Bank of England to cut interest rates in June is only 15%.
2. Bank of Singapore: U.S. debt hedging status is in jeopardy, highlighting the view that the dollar has reached its peak.
Mansoor Mohi-uddin, chief economist at Bank of Singapore, said in a research note that the downgrade of the U.S. credit rating last Friday has a wide impact on its economic outlook. First, the deteriorating fiscal situation in the United States reinforces our view that long-term U.S. Treasury yields will rise over time. The bank continues to predict that the 10-year Treasury yield will reach 5.00% in the next 12 months. Secondly, the threat to the safe-haven status of US Treasury bonds highlights the bank's view that the dollar has peaked. Finally, the huge U.S. deficit and inflation could force the Fed to keep interest rates at higher levels for longer periods of time.
3. Deutsche Bank: The downgrade of the U.S. credit rating increases the risk of the steepening of the U.S. Treasurys Research Department said that Moody's Rating's decision to downgrade the U.S. Treasurys rating from Aaa to Aa1 increases the risk of the steepening of the U.S. Treasurys curve. While Moody's is catching up with other rating agencies, the downgrade is a reminder that fiscal challenges are intensifying. This “could exacerbate the steeper tendency of U.S. Treasury bonds ahead of this week’s 20-year Treasury auction.” However, after other rating agencies previously lowered the U.S. Treasury bond ratings, investors bought when U.S. Treasury bonds weakened, and this time it is likely that a similar situation will be true.
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