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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: Federal Reserve Director Waller shows off, the EU is forced to be in a hurry?" Hope it will be helpful to you! The original content is as follows:
On July 21, during the Asian market on Monday, spot gold was trading around $3,346.77 per barrel. The weakening of the US dollar and the continued uncertainty of geopolitical and economic boosted demand for safe-haven gold. The Fed's independence dispute caused market concerns; U.S. crude oil was trading around $66.20 per barrel. Although the tariff news was mixed, the EU imposed the latest sanctions on Russia, causing supply concerns to support oil prices.
Data released on Tuesday showed that the consumer price index (CPI) rose in June, but the gains were considered moderate. Producer price inflation report released on Wednesday showed that price gains remained stable in June.
Powell said he expects inflation to rise this summer due to Trump's tariffs. His remarks delayed expectations of when the Fed could cut interest rates.
But despite the relatively stable overall employment growth and unemployment rate, the labor market still showed signs of weakness. "We are waiting for the tariffs to really land, not just as a negotiation strategy; but also waiting for the real performance of the labor market. Layers are lower than pre-pandemic levels, but hiring is bad. If a sudden wave of layoffs occurs, the unemployment rate will soon rise sharply." Fed governor Waller said last Friday that he tends to cut interest rates at his July meeting because he believes the impact of tariffs on inflation may be limited. Waller added that the underlying data “is not presentedThe private sector labor market is extremely healthy. The Fed should “before” respond to possible hiring slowdowns.
Powell faces criticism of the Fed’s unwillingness to cut interest rates almost every day. Last Wednesday, reports were reported that Trump planned to fire Powell, and the dollar fell, but the dollar rebounded after Trump denied the report. Powell’s term expires next May.
Chicago Fed Chairman Goulsby said he was “a little wary of signs that tariffs pushed up vifu.netmodity inflation in June CPI data, but still believed that the U.S. economy was in good shape and that the Fed’s policy interest rate could drop “quite a bit” in the next 12 months.
New Zealand’s second quarter CPI rose 0.5% month-on-month, slightly below the expected 0.6%. The annual inflation rate rose slightly from 2.5% year-on-year to 2.7%, but is still below the year-on-year forecast of 2.8%. Overall inflation remained within the target range of 1-3% of the New Zealand Fed. Tradable vifu.netmodities inflation rose sharply from 0.3% year-on-year to 1.2%. Non-trade assets fell from 4.0% year-on-year to 3.7%, indicating that domestic pressure has eased.
Quarterly data showed that cultural services (+9.5%qoq), electricity (+4.9%qoq) and vegetables (+10.0%qoq) increased significantly, accounting for more than 70% of the total quarterly CPI increase. However, these gains were reduced by a quarter-on-month decline of petrol prices -4.8% and a quarter-on-month decline of domestic accommodation services -9. 2% partially offset.
Japan core consumer inflation slowed for the first time in four months driven by a decline in energy prices. The core CPI excluding fresh food fell from 3.7% to 3.3% year-on-year, in line with expectations. Although it is still above the Bank of Japan's 2% target (which has been maintained since April 2022), this slowdown indicates that the pressure on energy costs is weakening. The overall CPI also fell from 3.5% in May to 3.3%.
However, the potential price pressure remains sticky. The core CPI excluding fresh food and energy rose from 3.3% to 3.4% year-on-year, highlighting the continued inflation of services and food. The inflation rate in the service industry rose from 1.4% year-on-year to 1.5%. Excluding fresh food Food prices soared 8.2% year-on-year, up from 7.7% in the same period last year. Rice inflation slowed slightly, but it was still at an all-time high, up 101.7% year-on-year.
European market
European market
The EU passed the 18th round of sanctions on Russia, which mainly hit the "core of the Russian war machine", including the banking, energy and military industries, and a new dynamic oil price cap mechanism.
U.S. consumer confidence improved in July, with the University of Michigan index rising from 60.7 to 61.8, the highest reading since February. The gains were wide, with the current situation index and expectations index rising to 66.8 and 58.6 respectively.
However, inflation forecastsMore meaningful changes were shown in the period. Inflation expectations fell sharply from 5.0% to 4.4% in the vifu.neting year. Long-term expectations fell to 4.0% to 3.6% for the third consecutive month. Although these readings are the lowest readings since February, they are still well above the end of 2024 levels, reflecting ongoing concerns about future price pressures.
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