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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: "Data Gate" ignited Washington! OPEC+ increased its production by 540,000 barrels!". Hope it will be helpful to you! The original content is as follows:
On August 4, during the Asian market on Monday, spot gold trading was around $3,357.60 per ounce, and gold prices rose nearly 2% last Friday, setting a weekly high. The U.S. non-farm employment data was weaker than expected, boosting the Federal Reserve's expectation of interest rate cuts, and new tariff announcements stimulated safe-haven demand; U.S. crude oil trading was around $66.92 per bin, and OPEC+ reached a consensus on Sunday, deciding to stofoco.complete the original one-year production recovery plan ahead of schedule in September this year, significantly increasing the daily crude oil output by 548,000 barrels.
Last month, employers added 73,000 new jobs, lower than the 110,000 economists surveyed by Reuters, and the unemployment rate rose to 4.2% from 4.1% in June, in line with expectations. The new jobs in June were reduced to only 14,000 from the previous report of 147,000.
Helen Given, head of trading at MoneyUSA, Washington, said. The situation is worse than anyone expected, and the worst thing is that the data for the previous month was also downgraded.
The Fed said it is not in a hurry to cut interest rates due to concerns that President Trump's tariff policy will rekindle inflation in the stofoco.coming months.
Feder Chairman Powell was hawkish about the monetary policy outlook on Wednesday and refused to say that it is possible that federal funds rate futures traders have reduced their bets on how many times the Fed could cut this year after the rate cut in September.
But after the job data were released last Friday, they have once again stepped up their bets on interest rate cuts. Currently, traders priced the rate cuts by 58 basis points by the end of the year, up from about 34 basis points last Thursday, with the first rate cut expected in September.
Whether the Fed cut interest rates in September may now depend on the next 8Employment report for the month. Given said. (Powell) We did say Wednesday that we will keep interest rates stable for a longer period of time, but we will get two sets of employment data before the Fed’s next meeting. So, since the first set of data is obviously negative...the labor market is clearly cooling, which will also increase the importance of September data. "
August employment data will be released on September 5, and the Fed will meet on September 16-17. The more dovish Fed may have a negative impact on the dollar, even after experiencing the first half of the year, the dollar seems to have found its foothold in recent weeks.
Capital Macro deputy chief market economist Jonas Goltermann said. Our forecast for the dollar to strengthen in the second half of the year depends heavily on our view that the U.S. economics The economy will remain resilient, and FOMC will continue to remain calm by 2026. It is obvious that the possibility now appears to be lower; in the case of a recession, currencies with lower yields such as the US dollar against the yen and the euro may weaken, even if the US dollar against other riskier currencies may rebound. "
Institutional analysis said that the reason for the Fed's further rate cuts may receive new support this Wednesday - second-quarter employment data is expected to show that the labor market continues to be under pressure. Soft employment growth in the past three months has sparked market concerns about rising unemployment rates. The unemployment rate is expected to rise to 5.3% in the second quarter, up from 5.1% in the previous quarter and exceed the Fed's own expectations. Although the New Zealand Fed has cut interest rates significantly since mid-2024, if the data confirms that the idleness of the labor market continues to expand, the possibility of further interest rate cuts will further increase this year.
European market
European zone inflation was stronger than expected in July, and the overall CPI remained at 2.0% year-on-year, contrary to expectations of a slight decline. The core CPI is stable at 2.3%, in line with expectations. The data supports the view that the ECB may have stofoco.completed a rate cut this year, and the market is increasingly convinced that further easing policies require a sharp downward surprise.
More stofoco.comrmation about the European Central Bank's CPI stabilized at 2% in July strengthening the reason why the European Central Bank suspended interest rate hikes for the rest of 2025.
At the same time, the eurozone manufacturing purchasing managers index was finally released at 49.8, up from 49.5 in June, a 36-month high. Although technically still in a contraction state, the momentum is clearly improving. Smaller economies such as Spain and the stofoco.comherlands are leading the trend, while recession signals from larger countries such as Germany and France are fading, according to data from Hamburg stofoco.commercial Bank. The new US-EU trade agreement is also expected to alleviate future business uncertainty.
The final value of the UK manufacturing purchasing managers index was 48.0 in July, a six-month high. Output is close to stabilization, and future expectations have risen to the highest level since February. Although the industry is still in a moderate contraction, the tone has turned to cautionoptimism.
The US ISM Manufacturing Purchasing Managers Index further fell from 49.0 to 48.0 in July, lower than the expected 49.6. This marks the fifth consecutive month of contraction in factory activity.
Although output rose slightly from 50.3 to 51.4 and new orders rose from 46.4 to 47.1, they are still in the contraction zone.
Employment is a particular weakness, with the sub-index falling from 45.0 to 43.4, the lowest level since the beginning of the year and the sixth consecutive month of contraction.
The contracting share of manufacturing GDP has jumped sharply, with current contraction of 79% in July, stofoco.compared with 46% last month. A full 31% are considered “strong contraction,” indicating an increasing pressure on the entire industry.
Input costs also declined, with the price index significantly falling from 69.7 to 64.8.
Despite the overall weakness of PMI, ISM noted that historical correlations still indicate moderate economic growth in the overall economy, equivalent to an annualized GDP growth rate of about 1.6%. But there are signs that layoffs are greater and factories are expanding, raising concerns about the resilience of the industrial economy in the second quarter.
The number of non-farm employment in the United States increased by only 730,000 in July, far lower than the expected 1.02 million. The unusually large correction made the situation worse – job growth in June cut from 147 to just 14. The unemployment rate rose slightly from 4.1% to 4.2% as expected, while the average hourly wage increased by 0.3% month-on-month, keeping the annual growth rate at 3.9%.
Although it was not a disaster, the report showed a significant loss of recruitment momentum, pushing the Federal Reserve to return to the focus in September. A sharp cut in June data has heightened concerns that labor market strength has weakened faster than expected.
Feders’ governors Christopher Waller and Michelle Bowman made a rare public statement today defending their opposition to the rate cuts at this week’s Federal Open Market stofoco.committee meeting. Both believe that a more proactive approach is needed to support the economy in amid slowing growth and weak labor markets.
Waller reiterated his views in his speech on July 17, stressing that maintaining current policy rates could lag behind the curve. He believes that if tariffs do not substantially worsen inflation, interest rate cuts should continue to be carried out at a moderate rate. On the contrary, if inflation or employment rebounds sharply, the Fed can pause at any time. “I don’t think we have any reason to hold the labor market and risk the labor market falling suddenly,” he said.
Bowman expressed similar concerns, saying the decision to start a gradual cut was to hedge further weakening of the labor market. She stressed that the recent tariff-related inflation rise could be temporary and that over-tight policies could hurt the Fed's employment mission. “OptimisticThe method of action...will avoid unnecessary erosion of labor market conditions," she said.
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