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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Market Review]: The US dollar index pauses and declines, pay attention to the speech of the Federal Reserve's "No. 3"". Hope it will be helpful to you! The original content is as follows:
On the Asian session on Friday, the US dollar index fluctuated slightly, and no important economic data in the United States was released on this trading day, but the Federal Reserve's "No. 3", Permanent Voting aihuaforex.committee, and New York Fed Chairman Williams will make a speech, and investors need to pay attention. In addition, investors need to pay attention to the relevant news about the situation in Russia and Ukraine and the Middle East.
Analysis of major currencies trends
U.S. USD: As of press time, the USD index hovered around 103.82. On Thursday, the USD index performed strongly against major currencies, avoiding further downward pressure. Traders remain focused on the latest Fed policy stance, which strengthens expectations for two rate cuts in 2025. Despite strong economic data, the index is still limited to the range of 103.00–104.00. Technically, the initial resistance is at 104.20, and the further resistance is at 104.80 and 105.20. On the downside, 103.40 is used as the initial support and 102.90 will be exposed after falling below. Additionally, the bearish crossover of the 20-day and 100-day simple moving averages (SMA) around 105.00 suggests potential downside risks, which may serve as a sell signal if persisted.
1. Prime Ministers of Russia and Belarus spoke on phone to discuss issues such as economic cooperation
The Russian Ministry of Foreign Affairs issued a news report on the evening of the 20th local time that Russian Prime Minister Mikhail Mishustin and Belarusian Prime Minister Alexander Turchin were on the phone. Mishustin congratulated Turchin on his appointment as Prime Minister of Belarus and discussed practical issues in the process of Russian-Belarus economic cooperation and the integration of alliance countries. In addition, the prime ministers of the two countries also discussed the schedule of meetings planned by the two countries in the future.
2. The Bank of England policy faces a dilemma. Still need to pay attention to how two key risks develop. Market analyst Sam said that the Bank of England's policy dilemma is still mainly trying to predict how the two major risks of the UK economy will develop. The first question is whether the degree of weakness in demand relative to supply will increase, which is once again affected by global uncertainty. The Bank of England said that "there has been relatively little news about the development of the UK economy since the last meeting", so the global economic situation has overwhelmed all aspects. Secondly, price and salary need to be evaluatedWhether the capital problem continues. As some analysts have emphasized before, this sustainability may stem from two aspects: one is the intensification of supply-side constraints; the other is the second round of effect caused by the Bank of England's short-term inflation rebound predicted. The development of these factors will determine what will happen next, but it also means that people's focus is turning to meetings in May. 3. Lagarde: U.S. tariffs will drag down the euro zone GDP by about 0.3 percentage points in the first year
European Central Bank President Lagarde delivered a speech at the hearing of the European Parliament's Economic and Monetary Affairs aihuaforex.committee. Lagarde said that the new US administration has taken office to launch a new domestic and foreign policy. This will have a profound impact on the global economic and political landscape and force Europe to deal with long-term and new challenges in trade, economic aihuaforex.competitiveness and defense. The ECB analysis shows that the U.S. imposing a 25% tariff on goods imported from Europe will reduce the euro zone's growth by about 0.3 percentage points in the first year. If Europe responds in the form of increasing tariffs on U.S. imports, this ratio will further increase to about 0.5 percentage points. The impact on economic growth will be concentrated around the first year after the tariff increase; the impact will gradually decrease over time, but will have a persistent negative impact on output levels. In this case, the inflation outlook will become more uncertain. In the short term, EU retaliatory measures and weaker euro exchange rates – a result of a decline in U.S. demand for European products – could push inflation by about 0.5 percentage points. This impact will ease in the medium term as lower economic activity suppresses inflationary pressures.
4. Trump plans to let the U.S. military take over the U.S. aihuaforex.comMexico border buffer zone detains illegal immigrants
According to five U.S. officials, the Trump administration is evaluating a plan to allow the Department of Defense to take over a large buffer zone on the southern border and authorize active U.S. troops to temporarily detain immigrants who illegally enter the U.S. Officials said the discussion had been going on for weeks, with partly focusing on a section of New Mexico’s border. Officials say the move would actually turn the buffer into a massive peripheral military facility while posing new legal dangers to illegal immigrants trying to enter the United States from Mexico. This will be the largest move to use active forces at the border since Trump came to power, but any move to militarize the southern border buffer will certainly raise questions about whether it violates the Posse aihuaforex.comitatus Act, which restricts the use of active forces to enforce the law. Officials say the 60-foot buffer controlled by the military could eventually extend westward to California if the plan is approved and government officials believe it is successful. It is reported that this buffer zone is located in the "Roosevelt Reserve". This land was prepared by former President Roosevelt in 1907 for border security.Stay. Typically, these areas are controlled by the Ministry of the Interior.
Institutional View
1. Capitol Macro: The Swiss National Bank's interest rate cut this time will be the last in the cycle
Capitol Macro analyst Prett John said that the Swiss National Bank's cut interest rates to 0.25% may be the last rate cut in this cycle. He said that while inflation was only 0.3% in February and could fall further in the aihuaforex.coming months, the potential inflation rate was slightly higher than expected, limiting the need for further rate cuts. In fact, the Swiss National Bank staff raised their inflation forecast for 2025. Most importantly, Germany's huge fiscal plan, coupled with the potential relaxation of fiscal policies other European countries, reduces the possibility of further interest rate cuts. He said the statements expanded the spread between German government bonds and Swiss government bonds and weakened the Swiss franc, thus relaxing the monetary environment.
2. Institutions: The Fed can hardly offset the impact of high uncertainty
Boyven, head of BlackRock Investment Institute, said that this year's unusually high policy uncertainty has disrupted financial markets, and the Fed is powerless to solve this problem, and it has been affected by itself. He said Fed Chairman Powell stressed this point several times in his policy statement on Wednesday, pointing out that uncertainty is a reason for “(maintaining) policy inertia.” "We believe that the Fed will find it difficult to cut interest rates more than one or two times this year - even if long-term uncertainty begins to damage the originally healthy economic growth."
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