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The US dollar suddenly appeared to "diving on the high platform"! Collective counterattack of non-US currencies
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange]: The US dollar suddenly appears to "diving on a high platform"! Non-US currencies collectively counterattacked." Hope it will be helpful to you! The original content is as follows:
Asian market market review
On Thursday, the risk aversion sentiment was boosted due to market concerns that the conflict between Iran and Israel was escalated, and the US dollar index hit the 99 mark during the session. As of now, the US dollar is quoted at 98.56.
Iran-Israeli Conflict-①Israeli Defense Minister: Eliminating Khamenei is one of the goals of this operation. ②White House: Trump has "a great" chance of negotiating with Iran, and he will decide whether to attack Iran within two weeks. ③Trump criticized the Wall Street Journal for its reports on Iran. ④Russia once again warned the United States not to intervene in military affairs. ⑤ Foreign media revealed: Since the beginning of the conflict, the Iranian foreign minister has made several calls with the US Middle East envoy.
Tariffs-①British media: The EU is pushing for a British-style trade agreement with the United States, and Europe is increasingly willing to accept a 10% benchmark tariff. ② Canada will adjust its existing counter-tariff tariffs on US steel and aluminum products on July 21. Trump: Powell is a shame for the United States, and he should cut interest rates by 250 basis points.
Trump extends the grace period for the implementation of TikTok's "no sale" bill for another 90 days.
The Bank of England kept the interest rate unchanged at 4.25%, and the voting ratio showed that internal differences increased. Traders expect the bank to cut interest rates by another 50 basis points this year.
Zelensky: He is ready for the highest level meeting and is willing to meet with Putin.
Summary of institutional views
Swedish Nordic Bank: Data dependence is still the "trump card" of the Federal Reserve, and the unemployment rate is more important than employment growth
The message conveyed by Powell's press conference is that the Federal Reserve is still waiting for clear data, but it is more about the impact of tariffs on the economy than the tariffs themselves. Powell said tariffs would be higher than Fed's expectations in December, one of the reasons why the Fed now expects a slowdown in rate cuts. However, Powell downplayed the importance of interest rate forecasts, saying that members have little "clear expectations" for future paths, but importantly, Fed members unanimously believe that the current policy is in a good state.
Federal Chairman Powell said the Fed relies on data and still expects tariffs to push up future xmserving.commodity prices. Powell is reluctant to provide clear guidance on interest rate policy, but said the Fed may need to observe "a few months" of data before deciding to cut interest rates. The development of the labor market will also be the key. Powell's description of the labor market is relatively optimistic and stresses that demand and supply have both declined. This shows that a slowdown in employment growth will not be a concern for the Federal Reserve, and the unemployment rate is the most important. Powell downplayed the impact of the Middle East conflict, saying historical experience shows that soaring oil prices usually only have a temporary impact on inflation, and that the United States is not now dependent on foreign oil as it was in the 1970s.
Interpretation of Goldman Sachs Federal Reserve's interest rate resolution: The Federal Reserve remains "standard"! The dot map hides the signal of "stagflation"
The Federal Reserve maintained the policy interest rate at 4.25%-4.50% as scheduled at its June meeting. The meeting statement pointed out that the uncertainty of the current economic outlook has shifted from "further increase" to "a decline but still at a high level." However, the larger focus of this meeting is on the change in the dot map: the rate cut forecast for 2025 remains unchanged (still at 50 basis points), but the number of rate cuts in 2026 and 2027 is lower than the March Economic Forecast (SEP) (25 basis points each).
Economic forecasts also reflect the tendency of "stagflation": inflation forecasts at the end of the year are raised, with core PCE rising from 2.8% to 3.1% in 2025 (this high figure may mean a one-time price impact caused by tariffs this year), and from 2.2% to 2.4% in 2026. Meanwhile, growth forecasts were lowered, with GDP falling from 1.7% to 1.4% in 2025 and from 1.8% to 1.6% in 2026.
At the press conference, Powell's resentment highlighted the resilience of the economy and employment, in contrast to the rising uncertainty in the survey (the battle between soft and hard data). He said the current policy is "well-positioned" enough to deal with the development of different situations, while trade and fiscal policies are "continuously evolving" and the Fed is ready to wait.
Regarding the labor market conditions, Powell believes it is at a very healthy level, and although it may be experiencing a "very very, very slow and continuous cooling", it is not enough to prompt any policy action because the economy is still in a "stable state." Regarding the dot map itself, Powell emphasizedThe xmserving.committee members continued to support the policy to remain unchanged (in good condition/moderately restrictive), but also admitted that the forecast range was unusually wide (not high confidence) because the Fed was still waiting for more data.
TD Securities: The Bank of England's decision will not change the pound's game
TD Securities strategists said in a report that the Bank of England's policy decision on Thursday will not change the pound's game. "Apart from the slightly dovish voting results, there are not many factors to consider in the pound." The Bank of England decided to keep interest rates unchanged with a 6-3 vote, and the three officials tended to cut interest rates by 25 basis points. The market expects the vote to keep interest rates unchanged to be 7 to 2. However, the strategists said central banks play a "secondary role" in geopolitical and macroeconomic development, especially given the concerns that the United States is preparing to strike Iran. "This means the dollar determines the rise and fall of various assets like a tide, so there is not much excitement for the pound here in the Bank of England."
Analyst Matthew Ryan: The Bank of England kept interest rates unchanged, but the statement retained the wording of...
The Bank of England did not cause much trouble at its June meeting. Policymakers described the current UK economy as a “soft” state, noting a recent slowdown in the UK labour market, while saying they are paying close attention to the impact on inflation.
The results of the interest rate voting were slightly dovish, with three officials (rather than the two expected by the market) who believed that the job market had a reason to cut interest rates immediately. However, the Bank of England still does not seem to be in a hurry to speed up the pace of easing policies. It is important for the market to retain the statement in this statement that the phrase “rate cuts will be gradual and cautious” – a word that the market had previously speculated that might be modified or abandoned.
While this does not necessarily mean that the Bank of England will not cut interest rates again at its next meeting, it at least reduces the possibility of a rate cut in August. We believe the Monetary Policy xmserving.committee (MPC) is in a dilemma. While weaker job markets should allow multiple rate cuts for the rest of the year, we believe rising inflationary pressures will prevent the xmserving.commission from relaxing monetary policy at a faster pace.
Hong Kong International: The Bank of England lacks forward-looking guidance, and the market keeps a close eye on details to predict the timing of interest rate cuts
Rancesco Pesole, foreign exchange strategist at Dutch International Bank, said that the problem now is that the Bank of England has decided not to provide any forward-looking guidance. This means that the market needs to interpret the details very carefully in order to judge the direction of the policy or to evaluate the timing of the next rate cut. The past month has been pretty bad for the UK, with performance below expectations in all aspects, inflation slightly below expectations, and economic growth is weak... For the Bank of England, all this seems to be predictable. The yield curve does not change much because it basically recognizes market expectations that one meeting will keep interest rates unchanged and one meeting will cut interest rates.
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