Wonderful introduction:
Let the sorrows be full of worries, and can't sleep, push the moon. The full moon hangs high, scattered all over the ground. I think that the bright moon will be ruthless, and the wind and frost will fade away for thousands of years, and the passion will fade away easily. If there is love, it should have grown old with the wind. Knowing that the moon is ruthless, why do you repeatedly express your love to the bright moon?
Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Ava Foreign Exchange Market Analysis]: The prospect of a rate cut in the United States has not changed, and the US dollar is hovering at a 5-month low." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
The US dollar index fluctuates sideways, still hovering at a five-month low, and finally closes up 0.184% to 103.58 As of now, the US dollar is quoted at 103.59.
The US February CPI data was lower than expected in all. The swap market's bet on the Fed's interest rate cut this year did not increase, but decreased from 73 basis points to about 67 basis points.
The US budget deficit this fiscal year has reached US$1.1 trillion, a record high in the same period.
White House Economic Advisor Hassett: U.S. GDP growth in the first quarter is expected to be between 2% and 2.5%.
OPEC maintains expectations of global crude oil demand growth in the next two years. In February, OPEC+ crude oil production averaged 41.01 million barrels per day, an increase of 363,000 barrels per day from the previous month.
U.S. EIA crude oil inventories recorded an increase of 1.448 million barrels in the week ending March 7, down from 2.01 million barrels.
U.S. oil industry executives meet with Trump next week to discuss issues such as tariffs, trade and liquefied natural gas exports.
The UAE forwarded Trump's letter to the Iraqi Foreign Minister.
Mexico's Minister of Economy will announce the tariffs on Thursday local time;
U.S. avatradescn.commerce Secretary: It's worth the money even if the tariff policy triggers a recession;
The EU announced that it would be worth 26 billion euros from next monthProducts are subject to counter-tariffs;
Canada will impose a 25% retaliatory tariff on US goods worth 29.8 billion;
Trump: Will respond to EU counter-tariffs.
Summary of institutional views
Nomura Securities: The Federal Reserve is unlikely to cut interest rates this year
U.S. inflation rate fell in February, but Nomura Securities economists believe that the Federal Reserve will not cut interest rates this year. The CPI sub-item with higher weight in core PCE inflation performed better than Nomura's expectations, causing Nomura to raise the forecast value of core PCE inflation in February to 0.32% from the previously estimated 0.28%. "The strong performance of the PCE-related portion of the CPI supports our forecast that the Fed will not cut interest rates this year," they said in the report. Unless there is an unexpected PPI data, core PCE inflation may cause the Fed to become more cautious about resuming interest rate cuts. Nomura added that while it is too early to see the impact of tariff hikes on consumer prices, potential inflationary pressures and policy-driven upside risks may support the Fed's hawkish approach.
Citibank: Will the weak performance of the U.S. labor market be exacerbated?
The JOLTs job opening data released overnight in the United States continues the basic characteristics of the U.S. labor market over the past year, namely low layoffs, low turnover and low employment rates coexist. Although the job market performed well in the fourth quarter of 2024, low employment rates remain the main reason for the relatively weak labor market performance in recent years. We expect that in the spring of this year, the overall weak labor market performance will be intensified by seasonal adjustments (softer demand in the peak season of regular recruitment), rising uncertainty in economic growth and weaker market sentiment. It is worth noting that the number of layoffs in government departments has previously continued to decline, which has led to a decline in overall layoffs, but the DOGE department led by Musk has accelerated the wave of layoffs in government departments since mid-February. This situation is expected to be reflected in the vacancies of JOLTs in February. Although it is expected to only increase the layoffs by about 0.1%, the data will more accurately reflect the scale of federal layoffs (the non-farm report only shows net changes in the employment population). Larger federal and private contractor layoffs that rely on government funds may appear in the summer, with the initial impact expected to be reflected in the number of initial unemployment benefits and monthly employment reports.
Bank: Can the "Malago Manor Agreement" be implemented?
Bank of America analyzes market speculation known as the "Malayslavia Agreement." This is an unproven, Trump-led dollar devaluation plan to enhance the avatradescn.competitiveness of the U.S. manufacturing industry. The content will include exchanging short-term U.S. bonds into long-term debts to prevent further escalation of the tariff war. If it is implemented, its impact on the foreign exchange market and market will be huge.
As a coordinated devaluation effortavatradescn.comIn the part, the US dollar will weaken significantly. The U.S. Treasury yield curve will be flatter, as short-term Treasury bonds will be exchanged for long-term bonds. Rising import costs will lead to increased inflation risks. The decline in export prices will support the domestic manufacturing industry in the United States.
The U.S. trading partners are unlikely to agree to such an agreement. Any radical unilateral action could disrupt global markets and lead to increased volatility.
Conclusion: The possibility of the "Malago Agreement" becoming a formal policy is small, but if it is implemented, the forced depreciation of the dollar may trigger inflationary pressures, a flatter U.S. Treasury yield curve and exchange rate fluctuations, and may be boycotted by global partners. For now, this is still a theoretical risk, not a policy reality.
Analyst Fawad Razaqzada: If the United States and Japan fail to break through the key resistance belt, may it trigger a new round of selling pressure?
The US dollar fell rapidly against the Japanese yen after a weaker-than-expected February CPI announcement, but it quickly rebounded to around 149 due to the risk sentiment boosted by the stock market recovery. But considering the weak performance of the U.S. economic data released recently, and the U.S. dollar hit its worst weekly performance since November 2022 last week. The United States and Japan still maintain a moderate bearish outlook. If the February PPI released on Thursday and the University of Michigan consumer confidence index released on Friday continue to strengthen the prospect of a slowdown in U.S. and Japan's downward pressure faced by the United States and Japan may continue to intensify. On the other hand, Ukraine's acceptance of the "one-month ceasefire agreement" proposal mediated by the US has injected optimism into the market, but the Trump administration's avatradescn.comprehensive imposition of 25% tariffs on steel and aluminum products in Canada, Mexico and China is still fermenting - the EU announced that it would implement 26 billion euro countermeasures from April 1, and Canada temporarily avatradescn.compromised after the US withdrew the threat of 50% steel and aluminum tariffs.
From a technical perspective, the United States and Japan are testing the key support of 149-150 to turn into resistance band, but if the breakthrough fails, it may trigger a new round of selling pressure. Pay attention to 148 for the first downward target. After the loss, it may test the support of the weekly low point of 146.50 or even the important psychological threshold of 145. But if a breakthrough can be achieved, it is expected to challenge the 152 of the 200-day moving average.
The above content is all about "[Ava Ava Foreign Exchange Market Analysis]: The US inflation has cooled down and the interest rate cut prospects have not changed, the US dollar has hovered at a 5-month low". It is carefully avatradescn.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: