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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:
In the foreign exchange market, various news is like the guidance of a weather vane, swaying the trend of the currency. For investors, accurately grasping the impact of these news is the key to formulating a trading strategy. On July 21, 2025, the foreign exchange market was also affected by the interweaving of many positive and negative news.
1. Review of good news
(I) Economic policies support domestic reinvestment of foreign-invested enterprises
The National Development and Reform eouu.cnmission, the Ministry of Finance and other seven departments recently jointly issued the "Notice on Implementing Several Measures to Encourage Domestic Reinvestment of Foreign-invested Enterprises". The notice focuses on multiple dimensions such as strengthening project service guarantee, optimizing the allocation of land elements, simplifying the relevant processing procedures for reinvestment and newly established enterprises, facilitating the use of foreign exchange funds, smoothing relevant financing channels, innovating financial products and services, and implementing and implementing support policies, aiming to promote foreign-invested enterprises to better deepen their cultivation and long-term development in the Chinese market. This move not only enhances the confidence of foreign-funded enterprises in the Chinese market, but from the perspective of the foreign exchange market, it is expected to attract more foreign capital inflows, increase the demand for RMB in the foreign exchange market, and provide certain support for the RMB exchange rate. For example, when a foreign-invested enterprise invests overseas funds in the country and reinvests, it needs to exchange RMB, which in turn promotes an increase in RMB demand, which is conducive to the appreciation of the RMB when other conditions remain unchanged.
(II) The increase in the scale of foreign exchange reserves stabilizes market confidence
Statistics of the State Administration of Foreign Exchange show that as of the end of June 2025, my country's foreign exchange reserves were US$3317.4 billion, an increase of US$32.2 billion from the end of May, an increase of 0.98%. The increase in the scale of foreign exchange reserves reflects the continued steady growth of my country's economy and maintains a good development momentum. SufficientForeign exchange reserves are an important manifestation of the country's economic strength and international payment capacity, and can provide a solid backing for the foreign exchange market. On the one hand, when the RMB exchange rate faces volatility pressure, the central bank can use foreign exchange reserves to intervene in the market to stabilize the exchange rate; on the other hand, the increase in the scale of foreign exchange reserves sends a positive signal to the market, enhancing investors' confidence in RMB assets, attracting more international capital inflows, and posing a positive effect on the RMB exchange rate.
(III) The exchange rates of some currency pairs rose
Judging from the foreign exchange market transaction data on that day, the exchange rates of many currency pairs rose. For example, the Burundian franc to the Japanese yen have a exchange rate of 0.00040350; the South African rand to the Japanese yen have a exchange rate of 0.01608000, etc. The rise in exchange rates of these currency pairs reflects changes in the supply and demand relationship of relevant currencies in the market. It is undoubtedly good news for investors holding long positions in these currencies. At the same time, some major currency pairs, such as the Australian dollar against the Colombian peso, rose by 26.21280,000, and the Australian dollar against the Argentine peso, rose by 24.79620,000, which may imply that the market demand for the Australian dollar, or the increase in supply to the Colombian peso and Argentine peso, will affect the status and trend of the relevant currencies in the foreign exchange market, and thus affect the pattern of the entire foreign exchange market.
(IV) Seasonal Strong Factors of the Japanese Yen
From the historical law, the Japanese Yen performed strongly in July. Since 2020, the yen has risen every July, with an average increase of 2.8% against the US dollar. A variety of factors contributed to the seasonal market, including changes in the Bank of Japan policy, position adjustments before the August summer holiday, and exporters’ exchange of overseas revenue back to the Japanese yen to pay dividends. In July 2025, these factors may play a role again. If the yen continues to be strong, it will be a good thing for long investors in the Japanese yen, and it will also affect the trend of related currency pairs such as the US dollar against the Japanese yen, triggering a series of chain reactions in the foreign exchange market, such as investors adjusting the allocation ratio of the yen to other currencies in the investment portfolio.
2. Copying negative news
(I) The US dollar faces multiple negative factors
In the first six months of 2025, the ICE US dollar index fell by nearly 11%, the largest decline in the index since the Nixon era in 1973. At present, the US dollar faces many negative factors. First, foreign exchange hedging demand has increased. With strong performance in international stock markets outside the United States, coupled with uncertainty in Trump's trade agenda, foreign investors holding dollar positions continue to hedge the risk of the dollar, which became one of the key drivers of the dollar's weakening in the first half of the year and may continue the trend. Second, the Federal Reserve is about to cut interest rates. The Fed observation tool of the Chicago Mercantile Exchange (CME) shows that traders believe the Fed may cut interest rates as early as September, and eouu.cnpared with other major central banks around the world, the Fed has more room for interest rate cuts in the next year, which will put downward pressure on the dollar. Third, the US government's de facto weak dollar policy. Trump and his team will exchange ratesIt is regarded as a trade barrier, and the weakening of the US dollar is in line with its intention to revitalize the US manufacturing industry, which also puts the US dollar in the foreign exchange market under great selling pressure.
(II) The exchange rate of some currency pairs fell
Also in the foreign exchange market trading data that day, some currency pairs fell. For example, the South African rand fell against a variety of currencies, including against the Lesotho Loti, the Canadian dollar, the New Taiwan dollar, the Norwegian kroner, etc. The decline in the South African rand exchange rate reflects a decrease in demand for the South African rand or a significant increase in supply. It is good for investors holding short positions in South African rand, but it brings losses for investors holding long positions. At the same time, the depreciation of the South African rand in the foreign exchange market may trigger changes in market behavior such as arbitrage trading related to the South African rand, affecting the flow of funds and trading activity in the foreign exchange market.
(III) Uncertainty in the global economic outlook affects market confidence
The uncertainty in the global economic outlook has always lingered above the foreign exchange market. Although the International Monetary Fund (IMF) has not significantly adjusted its global economic growth expectations, it pointed out that some emerging economies face growth challenges. The uncertainty of global economic growth has led to a rise in risk aversion among investors. In the foreign exchange market, investors may reduce their holdings of high-risk currencies and instead seek safe-haven currencies. For example, poor economic outlook may lead to investors selling emerging market currencies, which in turn triggers depreciation of related currencies, and at the same time drives the appreciation of safe-haven currencies such as the Japanese yen and Swiss francs, disrupting the original balance of currency supply and demand and exchange rate trends in the foreign exchange market.
To sum up, on July 21, 2025, the foreign exchange market was affected by the interweaving of various positive and negative news. During the trading process, investors need to eouu.cnprehensively consider these news, pay close attention to market trends, and adjust their investment strategies in a timely manner to cope with the eouu.cnplex and changeable foreign exchange market.
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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