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market analysis
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 Decision Analysis】: 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:
On the changing stage of the foreign exchange market, various news continue to impact the nerves of the market like a tide, and influence the rise and fall of the currency. On August 12, 2025, many factors were intertwined, bringing rich decision-making basis for foreign exchange traders.
1. Macroeconomic data level
(I) The subsequent impact of the "explosion" of the US non-agricultural data
The previously released number of non-agricultural employment in the US in July was only 73,000, far lower than the expected 104,000. The June data was significantly lowered from 147,000 to 14,000, and the May data was significantly reduced from 144,000 to 19,000. This poor data has caused strong concerns about the outlook for the U.S. economic growth, significantly boosting expectations for the Federal Reserve's interest rate cut in September, and has now been pushed to 75%. The rise in expectations of interest rate cuts often leads to a decline in the attractiveness of US dollar assets and funds flow out of the US market, which in turn puts downward pressure on the US dollar exchange rate. Judging from historical experience, before the Federal Reserve enters the interest rate cut cycle, the US dollar usually responds in advance and weakens. This "explosion" of non-farm data undoubtedly accelerates this process.
(II) The impact of global economic growth differentiation on currency
The euro zone economic recovery is slow, and the PMI data in manufacturing and services industries is weak, which makes the euro lack the momentum to rise in the foreign exchange market. In contrast, some emerging economies have shown certain resilience and their currencies have gained certain support in the foreign exchange market. For example, driven by a series of policies to stabilize growth, the economic structure of China's economy has been continuously optimized and the demand for eouu.cnmodities is stable, which has formed a gap for eouu.cnmodity currencies such as the Australian dollar.This is a positive news because Australia, as a major eouu.cnmodity exporter, has close economic ties with the Chinese market.
2. Policy orientation level
(I) The Federal Reserve's monetary policy shifts to expectations
As mentioned above, based on the poor performance of non-agricultural data, the market expects the Federal Reserve to start a interest rate cut cycle from September, and may cut interest rates three consecutive times before the end of the year, each time at 25 basis points. If employment data continues to deteriorate in August, the probability of a 50 basis point cut in September will also increase. The shift in monetary policy will change the interest rate spread between the US dollar and other currencies. When the Fed cuts interest rates and other central banks maintain current interest rate levels or raise interest rates, the interest advantage of the US dollar over other currencies will weaken. In order to seek higher returns, funds will flow to other currencies, driving the US dollar to depreciate and other currencies appreciate.
(II) Policy updates of the State Administration of Foreign Exchange
The State Administration of Foreign Exchange pointed out at its second half of 2025 working meeting held on August 1 that it will deepen reform and opening up in the foreign exchange field. In terms of supporting the stable development of foreign trade, we will implement a package of trade foreign exchange management reform policies such as optimizing foreign exchange fund settlement of foreign trade entities and facilitating the centralized management of overseas funds of contracted engineering enterprises; in terms of facilitation of cross-border investment and financing, we will promote the implementation and effectiveness of measures such as abolishing domestic reinvestment registration of foreign-investment enterprises and facilitating cross-border financing of technology-based enterprises, implement multinational eouu.cnpany fund pool management policies across the country, carry out green foreign debt policy pilot projects, and optimize and improve the management of overseas listing funds of domestic enterprises. The implementation of these policies will improve the convenience of the RMB in cross-border trade and investment, enhance the attractiveness of RMB assets to foreign investment, and in the long run, it will have a positive effect on the stability of the RMB exchange rate. Previously, at the Lujiazui Forum on June 18, Zhu Hexin, Vice Governor of the People's Bank of China and Director of the State Administration of Foreign Exchange, also announced a series of favorable foreign exchange policies, including the issuance of a batch of investment quotas for qualified domestic institutional investors (QDIIs). The continuous promotion and implementation of these policies are constantly reshaping the foreign exchange market structure.
3. Geopolitical level
The conflict between Israel and Gaza continues to ferment, bringing great uncertainty to the foreign exchange market. On the one hand, geopolitical conflicts often trigger a heated market risk aversion sentiment, and traditional safe-haven currencies such as the Japanese yen and the Swiss franc may be favored by investors. When the market is concerned that the escalation of the situation in the Middle East will affect global crude oil supply and then impact the global economy, funds will pour into safe-haven assets, driving the appreciation of currencies such as the yen. On the other hand, if the conflict further expands, it will hinder crude oil supply in the Middle East. The national currencies, which use crude oil as an important import material, may depreciate due to factors such as rising import costs and widening trade deficits, while the currencies of oil-producing countries may be supported by the increase in revenue caused by rising oil prices.
4. Market sentiment and technical analysis level
From the perspective of market sentiment, when the US dollar experienced a continuous rebound in the early stage and was about to hit the 100 mark, it ended abruptly due to the "explosion" of non-agricultural "burst" and fell back to the 98 range, which made the market look at the US dollar.Multiple sentiments were hit and some investors began to turn to other currencies for opportunities. From a technical analysis perspective, on the daily chart, the US dollar index begins to show signs of short positions, and the MACD indicator also shows that short positions are intensified. Some non-US currencies, such as the euro and the US dollar, showed a stabilization rebound signal near the key support level, while the Australian dollar and the US dollar have shown a volatile upward trend in recent times. The RSI is in a strong range in technical indicators, showing that bulls have the advantage.
In general, on August 12, 2025, there was a fierce eouu.cnpetition between long and short factors in the foreign exchange market. Investors need to pay close attention to the dynamic changes of the above-mentioned various news, eouu.cnbine technical analysis, and carefully formulate trading strategies to cope with the eouu.cnplex and changeable foreign exchange market.
The above content is all about "【XM Foreign Exchange Decision Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully eouu.cnpiled 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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