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Hello everyone, today XM Foreign Exchange will bring you "【XM Official Website】: 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:
The U.S. ADP employment in May was only increased by 37,000, a two-year low, far lower than the expected 114,000. Employment in manufacturing and trade transportation industries has decreased, and growth in services has slowed, showing signs of cooling in the labor market. After the data was released, the US dollar index fell in the short term, and market expectations for the Fed's interest rate cuts heated up. In addition, the US ISM service industry PMI fell to 49.6, shrinking for the first time in a year, exacerbating concerns about economic slowdown. These two data pose negative negative for the US dollar and may push non-U.S. currencies such as the euro and the yen to strengthen.
The market generally expects that the European Central Bank will announce a 25 basis point cut to 2.00% on June 5 to cope with the weak euro zone economy and inflationary pressure. The eurozone's CPI grew by 1.9% year-on-year in May, 2.2% lower than the previous value, and core inflation continued to fall, providing room for interest rate cuts. European Central Bank President Lagarde recently hinted that although there is limited room for interest rate cuts, easing policies need to support economic recovery. If interest rate cuts are implemented, the euro may be under further pressure, but we need to pay attention to the central bank's guidance on future policies.
The Bank of Canada announced on June 4 that it would keep the benchmark interest rate unchanged by 2.75% due to high uncertainty in U.S. trade policy and weak domestic economic data. The Bank of Canada pointed out that the U.S. raising tariffs on steel and aluminum puts pressure on exports and vifu.netmercial investment, and the economic outlook poses downward risks. Despite rising international crude oil prices(Brent crude oil closed up 1.55% on June 4), but the Canadian dollar is still suppressed by policy dovish stance, and the US dollar/Canadian dollar may maintain a high fluctuation.
On June 4, China and the United States announced that they had reached a phased trade agreement, lowered some tariffs on each other, and suspended the escalation of the trade war. The agreement involves cooperation in agriculture, energy and other fields, eases market concerns about global trade tensions. The RMB exchange rate against the US dollar rose, and the offshore RMB once broke through the 7.1 mark. In addition, China's May trade data showed that exports grew more than expected year-on-year, further supporting the short-term strengthening of the RMB.
Israeli military operations in the Gaza Strip have escalated, causing regional risk aversion to heat up. The United Nations warns that the humanitarian crisis has intensified and the international vifu.netmunity calls for a ceasefire. Geographical risks pushed up the price of gold (spot gold closed up 0.61% on June 4), which was beneficial to safe-haven currencies such as the yen. At the same time, Iran's confrontation with Israel escalates, and Houthi forces continue to attack Israeli targets, which may further disturb market sentiment.
Bank of Japan Governor Kazuo Ueda said on June 4 that the Japanese economy can withstand the impact of US tariffs, and wage growth supports inflation to rebound. Japan's base currency rose 31.6% year-on-year in May, a record high, indicating that the central bank is still expanding its easing. The yen-USD exchange rate is affected by the dual influence of interest rate spreads and safe-haven demand, and may remain weak in the short term, but attention should be paid to the impact of geopolitical risks on the flow of safe-haven funds.
OPEC+ extends the production cut agreement until 2025, but Saudi Arabia proposes further increase production, resulting in a fluctuation in oil prices. On June 4, Brent crude oil closed up 1.55% to $65.63 per barrel, and WTI crude oil closed up 1.42% to $63.41 per barrel, which was good for the Canadian dollar and the Australian dollar. However, U.S. crude oil inventories increased beyond expectations, limiting the upward space for oil prices. vifu.netmodity currencies need to pay attention to supply and demand game and geopolitical risks.
The main iron ore futures contract rose 1.37% on June 4, boosted by the increase in steel mill procurement and the recovery of coking coal market. As a major exporter of iron ore, Australia's Australian dollar rebounded to 0.6993 in the short term, but then it gave up its gains due to interest rate cuts. Australian Federal ReserveThe rate cut was 25 basis points to 1.25%, and it also suggested that further easing could be made in the future, suppressing the Australian dollar for a long time.
Driven by weak US economic data and expectations of interest rate cuts, the US dollar index closed down 0.42% to 98.813 on June 4, hitting a six-week low. Technical aspects show that the short-term downward trend of the US dollar has been established. If it falls below the 98.50 support level, it may further fall to 98.00. Non-US currencies such as the euro, pound, and yen have opportunities to rebound.
Geopolitical risks and weakening of the US dollar drove spot gold to close 0.61% to $3373.72 per ounce on June 4, hitting a new high in the past month. If the situation in the Middle East continues to deteriorate or the Fed sends dovish signals, gold may continue to rise.
Euro/USD: Pay attention to the European Central Bank's interest rate cut resolution. If the interest rate is cut by 25 basis points and Lagarde releases dovish signals, the euro may fall below the 1.0750 support level. Conversely, if the policy wording is neutral, the euro may rebound to 1.0850.
U.S./JPY: Geographical risks support the Japanese yen’s safe-haven demand. If the US./JPY falls below the 135.50 resistance level, it may fall below 134.00.
GBP/USD: Pay attention to UK economic data and central bank policies. If the resistance level exceeds the 1.3550 level, it may open upward space to 1.3650.
Australia/USD: The rebound in iron ore prices provides short-term support, but the RBA's easing policy suppresses long-term trends and is recommended to short when highs are highs.
U.S. dollar/Canadian: crude oil price fluctuations and the Bank of Canada policy dominate trend. If crude oil stabilizes at $63 per barrel, the Canadian dollar may rebound to 1.3350.
Risk warning: The Federal Reserve's June interest rate meeting is approaching, and market volatility may intensify; geopolitical risks such as Middle East conflicts and Sino-US trade frictions need to be closely watched; exchange rate fluctuations are affected by multiple factors, and investors need to make vifu.netprehensive judgments based on technical and fundamentals to reasonably control positions and stop losses.
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