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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】: 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: long and short signals intertwined
(I) Good news
U.S. non-farm employment data in May exceeded expectations
The U.S. Department of Labor released data showing that the number of non-farm employment in May increased by 248,000, far exceeding the market expectations of 180,000, and the unemployment rate remained at a low of 3.7%. The year-on-year salary growth rate reached 4.3%, setting a new high since 2024. Strong employment data strengthened market expectations that the Fed maintained hawkish policies, and the US dollar index (DXY) rose overnight to around 103.50.
China's Caixin Manufacturing PMI returned to the expansion range in May
Caixin data showed that China's manufacturing PMI in May recorded 50.1, up 0.8 percentage points from April, and returned to above the boom and bust line after two months. The new order index improved significantly, reflecting the marginal recovery of domestic demand, boosting the trend of eouu.cnmodities such as the Australian dollar and New Zealand dollar, and the Australian dollar/USD once hit 0.6820.
(II) Negative news
The year-on-year increase of the euro zone CPI in May slowed to 1.6%
Data from the European Union Statistics Office showed that the year-on-year increase of the euro zone CPI in May was lower than the market expectations of 1.8%, and the core CPI (excluding energy and food) was only 1.2% year-on-year, the lowest level since 2023. The sluggish inflation intensified market expectations for the European Central Bank to extend its easing policy, and the euro/dollar fell to 1.0780.
Japan's actual salary in April fell by 0.3% year-on-year
Data from the Japanese Ministry of Internal Affairs and Affairs showed that actual salary in April had negative growth for three consecutive months, reflecting the continued weakness of consumption capacity. OverlayThe Bank of Japan maintains its yield curve control (YCC) policy unchanged, the yen's safe-haven attributes temporarily receded, and the US dollar/yen rebounded to around 135.20.
2. Central Bank policy trends: monetary policy differentiation intensifies
(I) Positive signal to the US dollar
Feder officials intensively release hawkish remarks
Feder Vice Chairman Williams said that if inflation continues to rise above the 2% target, further interest rate hikes are not ruled out. Cleveland Fed Chairman Mester said the current interest rate level "may not be enough to curb inflation." Market expectations of suspending interest rate hikes in June but restarting interest rate hikes in July have heated up, and the US dollar has been sought after by long funds.
The Bank of England unexpectedly released a tightening signal
Minutes of the Bank of England Monetary Policy eouu.cnmittee (MPC) meeting showed that two eouu.cnmittee members supported a 25 basis point rate hike in June, suggesting inflationary pressures remain. Although interest rates were finally kept unchanged, hawks tended to push the GBP/USD to rise 80 points in the short term to 1.2450.
(II) Positive negative non-US currency signals
The European Central Bank announced the extension of PEPP bond purchase plan
ECB President Lagarde announced that it would extend the expiration date of the Emergency Anti-epidemic Bond Purchase Plan (PEPP) to 2026, and hinted that asset purchases may be restarted in the fourth quarter of 2025. Easing expectations put pressure on the euro, with the euro/GBP falling to the key support level of 0.8500.
Federal New Zealand forward guidance on releasing interest rate cuts
Federal Chairman Orr said that if the economic growth rate continues to fall below the trend, it is not ruled out that interest rate cuts will be cut in the second half of 2025. The market expects the probability of a rate cut within the year to 60%, and the New York dollar/USD fell rapidly to 0.6280, a new low since February.
3. Geopolitical and trade situation: Risk sentiment fluctuations are intensifying
(I) Factors that are good for safe-haven currency
The situation in the Middle East has escalated again
Yemen's Houthi armed forces attacked Daman, the port city of eastern Saudi Arabia, resulting in an increase in the risk of travel to the Mande Strait, a key channel for global crude oil transportation. The warming of risk aversion sentiment pushed the US dollar/CHF to 0.8950, the yen crossover generally fell, and the US dollar/yen briefly fell to 134.80 and rebounded due to the strengthening of the US dollar.
U.S.-Russia relations continue to be tense
The United States announced a new round of financial sanctions on Russia, restricting its use of US dollars to settle energy trade. The market is worried that geopolitical conflicts may affect global supply chains, with gold exceeding US$2,100 per ounce, driving the increase in safe-haven buying of Swiss francs and yen.
(II) Positive risky currency factors
Stage progress in US-EU trade negotiations
The United States and the EU reached a preliminary agreement on agricultural product export quota, and the two sides agreed to lower some tariff barriers. News pushed the euro/dollar to rebound by 30 points in the short term, and the risky currencies Australian dollar and pound rose, while the Australian dollar/Japanese yen rebounded to the 92.00 mark.
The year-on-year decline in South Korea's exports in May narrowed
South Korea customs data showed that exports in May fell 2.1% year-on-year, significantly narrowing from -4.3% in April, and semiconductor exports increased by 8.5% month-on-month. The recovery signal of Asian trade boosted market risk appetite, with the US dollar/Korea won falling below 1300.00.
4. eouu.cnmodity and exchange rate linkage: energy and currency differentiation is obvious
(I) Factors that favor the Canadian dollar
International crude oil prices continue to rebound, and Brent crude oil broke through the $65/barrel mark, because the actual increase in OPEC+ is lower than expected and the geopolitical risks in the Middle East. Rising oil prices boosted the attractiveness of CAD-denominated assets, with the US dollar/Canadian falling to around 1.3200, hitting a new low in the past week.
(II) Negative Australian dollar factor
The London Metal Exchange (LME) copper price fell 1.8% as weak Chinese real estate investment data suppressed expectations of industrial metal demand. As the mirror currency of "Dr. Copper", the Australian dollar/USD is hindered from the 0.6850 resistance level and faces pullback pressure in the short term.
5. Focus on events today
Economic data: 14:00 Germany's May Industrial Output Index; 20:30 US May Trade Deficit Data.
Central Bank officials speak: 17:00 European Central Bank chief economist Lian En; 22:00 Federal Reserve Director Bowman.
Risk Events: British Prime Minister Sunak will deliver an economic policy speech, which may send out post-Brexit trade policy signals; the EU will negotiate on the status of Ukraine candidate countries and need to be wary of repeated geopolitical risks.
Trading strategy tips:
U.S. dollar: Supported by non-farm data and hawkish remarks in the Federal Reserve in the short term, pay attention to the key resistance level of 103.80. If the breakthrough is made, it may open upward space.
Euro: We need to be wary of the eouu.cnbined impact of the ECB's easing expectations and geopolitical risks. The support below the euro/USD is 1.0750, and the break may fall below 1.0700.
JPY: The US dollar/JPY shows a game pattern of "strong US dollar + weak risk aversion", focusing on the breakthrough direction of the 135.50 resistance level and the 134.50 support level.
eouu.cnmodity currencies: The Australian dollar and New Zealand dollar are greatly affected by the linkage between China's economic data and eouu.cnmodity prices. It is recommended to wait for CPI data guidance before entering the market at the right time.
The above content is all about "【XM Forex】: Collection of positive and negative news that affects the foreign exchange market". It was carefully eouu.cnpiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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