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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: Waller's "pigeon" is back on, is there no chance of "Puzehui" again?". Hope it will be helpful to you! The original content is as follows:
On August 29, during the Asian market on Friday, spot gold trading was around $3,416.22/ounce, and gold prices hit a five-week high on Thursday. Thanks to the weakening of the US dollar, geopolitical tensions in the Middle East have resurfaced, and investors are still worried about the independence of the Federal Reserve, which has promoted the inflow of safe-haven funds; U.S. crude oil trading was around $64.25/barrel, oil prices closed higher on Thursday, rebounding from the decline in the early trading, after the White House said that US President Trump was dissatisfied after learning that Russia had attacked Ukraine with missiles and drones overnight, and that Israel confirmed air strikes against the Houthis in Yemen.
President Trump has stepped up efforts to exert more influence on monetary policy and tried to fire Fed Director Cook, putting pressure on the dollar again. Cook filed a lawsuit Thursday saying Trump has no right to remove her.
Data released on Thursday showed that the number of initial unemployment claims in the United States has decreased, and GDP growth is stronger than expected. The dollar decline has narrowed for a while, but it has not changed much in the afternoon, and traders are waiting for other key data.
Francesca Fornasari, head of foreign exchange solutions at Insight Investment, said, "This is not a sign that the economy is about to weaken sharply. Ultimately, everything will depend on the actions of the Federal Reserve and the non-farm employment data. I expect the data for next week to be closely watched." Williams said Wednesday that interest rates may be cut at some point, but policymakers need to see the economic situation reflected by the upcoming data before deciding whether the rate cut is suitable for the September 16-17 meeting. Key figures ahead of September’s meeting include personal consumption expenditure (PCE) price index on Friday(Inflation indicator favored by the Federal Reserve) and a monthly employment report a week later.
Trades are currently expecting a 25 basis point cut rate cut next month, according to the Chicago Mercantile Exchange (CME) FedWatch tool.
Trump pushed carefully to select dovish candidates to join the Fed's interest rate decision-making vifu.netmittee, which led to a drop in short-term U.S. Treasury yields. Cook filed a lawsuit Thursday saying President Trump has no authority to remove him from office, a case that could reshape the long-established norm for the Fed’s independence.
Japanese Finance Minister Katsunobu Kato said on Friday that he was aware of interest rates rising, adding that he would continue to engage with bond market participants and manage debt policies appropriately.
The Japan Bureau of Statistics showed on Friday that the Tokyo Consumer Price Index (CPI) rose 2.6% year-on-year in August, vifu.netpared with 2.9% last month.
In addition, Tokyo's CPI, which excludes fresh food, rose 2.5% year-on-year in August, higher than expected 2.5% and lower than last month's 2.9%. In August, Tokyo's CPI, which excludes fresh food and energy, rose 3.0% year-on-year, vifu.netpared with the previous value of 3.1%.
The ECB's July meeting account emphasized that while the current situation is consistent with another interest rate cut, policy makers believe that waiting until September has "high option value."
After the interest rate cuts eight times in nine meetings, the interest rate was judged to be in a "basically neutral area", financial conditions remained stable, and inflation was considered "in a good position" relative to the medium-term target.
The minutes of the meeting emphasized that uncertainties, from trade disputes to geopolitical risks, require patience. Keeping policy stability can provide time for assessing the impact of earlier rate cuts, monitoring data on manufacturing, service sector inflation, exchange rate and financial markets, and the results of trade negotiations.
The moment when September is listed as new employee forecasts and new data will interpret the potential direction of the economy more clearly. Policymakers stress that this will help address the “counterattack power” that currently masks the signal.
While some believe that “further rate cuts” are “in view of “increased downside risks to output and inflation”, mainstream views tend to be patient. By waiting until September, the ECB has maintained flexibility and ensured that any further moves are better based on the latest evidence.
The Swiss economy grew only 0.1% month-on-month in the second quarter, in line with expectations, as SECO noted that the “expectation adjustment” came after higher-average growth earlier this year. Industrial output and exports contracted sharply, while the service industry generally rose.
SECO also released an updated scenario reflecting the drag on the U.S. imposed new tariffs on Swiss imports, warning that the economy may now expand slowly than previously predicted.
The federal government's June forecast has pointed out that growth is below average, with GDP forecast of 1.3% in 2025, 20261.2% per year. The revised simulation now sets growth rate for 2025 at just 1.2% and 0.8% in 2026, citing higher tariffs to be introduced in August.
While a severe recession is not expected, SECO warns that this could have a significant impact on exporters and certain industries facing U.S. demand.
As of the week ended August 23, the number of initial unemployment claims in the United States fell -5 to 229, lower than the expected 231. The four-week moving average of the number of first-time unemployment benefits rose 2.5k to 228.5.
In the week ending August 16, the number of people who continue to apply for unemployment benefits fell by -70,000 to 19.54 million. The four-week moving average of the number of people who continue to apply for unemployment benefits rose by 4.5k to 1956k.
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