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The US dollar index net bulls, ending with 5 consecutive declines. The bulls surged. Can these points help them continue their rebound?
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Hello everyone, today XM Foreign Exchange will bring you "[XM official website]: The US dollar index net long, the end of 5 consecutive declines, and the bulls surged wildly. Can these points help them continue their rebound?" Hope it will be helpful to you! The original content is as follows:
Asian Market Review
The latest round of economic data on Friday showed that the U.S. import prices rebounded in April, while consumer confidence was still sluggish in May. The US dollar index fell first and then rose. As of now, the US dollar price is 100.79.
Tariff progress:
Moody's downgraded the US sovereign credit rating from Aaa to Aal, and at the same time adjusted the outlook for the US sovereign credit rating from "negative" to "stable". White House xmaccount.communications Director criticized Moody's economist Zandi for his political stance as anti-Trump, saying no one took his "analysis" seriously.
Trump: New tariffs will be imposed on many countries in the next two to three weeks. US Treasury Secretary Bescent: The United States is focusing tariff discussions on 18 key partnerships. If countries do not negotiate sincerely, they will receive a letter containing the U.S. tariff rate, which will be at the April 2 level.
Trump said India proposed to cut US tariffs, but he was not in a hurry to reach an agreement; Vietnam and the United States held their first direct ministerial negotiations; According to the Financial Times, the United States and Europe broke the deadlock and restarted tariff negotiations, covering areas such as tariffs, digital trade and investment opportunities; Japanese media: Japan is considering providing subsidies to Tesla charging stations in tariff negotiations with the United States, or is unable to reach a trade agreement with the United States before the end of July; the South Korea-US trade agreement may be reached after the July 8 deadline.
United StatesInflation expectations for one-year in May hit the highest since 1981; consumer confidence fell slightly to the second lowest in history, but ended a four-month sharp decline.
Federal Bostic: It is expected that interest rate cuts will be cut once this year and the United States will not fall into recession.
The Russian-Ukrainian negotiations lasted only two hours. Russia asked Ukrainian to withdraw troops as a condition for a ceasefire. Ukrainian believed that Russia's demands were "unacceptable and the negotiations were fruitless", and proposed Russian-Ukrainian presidential talks. The two sides reached an agreement on the exchange of 1,000 prisoners of war and agreed to continue negotiations after submitting the terms of the ceasefire. Regarding the "Puze Society", the Russian official said: It is possible.
Trump: We must meet with Putin and will speak with Putin at 10 a.m. Monday. If we cannot reach an agreement on Ukraine, we will impose "destructive" sanctions on Russia.
Middle East Progress:
Trump: We have $10 trillion in investment and are currently considering increasing to about $13 trillion. The United States has proposed a nuclear deal to Iran.
Hamas holds a new round of Gaza ceasefire negotiations with Israel, and Israeli Prime Minister Netanyahu calls the negotiations "a framework to end the war." Meanwhile, the Israeli army launched a large-scale ground operation in northern and southern Gaza to prevent the Minister from confirming that the leader of the military department in the Gaza Strip of Hamas was killed. According to documents, Hamas' 2023 attacks aim to undermine the agreement on normalizing Israel-Saudi relations.
Iranian Foreign Minister: Iran's uranium enrichment activities will continue regardless of whether an agreement is reached.
Tariff progress:
Trump: New tariffs will be imposed on many countries in the next two to three weeks.
U.S. Treasury Secretary Becent: The United States is focusing tariff discussions on 18 key partnerships. If countries do not negotiate sincerely, they will receive a letter containing the U.S. tariff rate, which will be at the April 2 level.
Trump said India proposed to cut US tariffs, but he was not in a hurry to reach an agreement; Vietnam and the United States held their first direct ministerial negotiations; According to the Financial Times, the United States and Europe broke the deadlock and restarted tariff negotiations, covering areas such as tariffs, digital trade and investment opportunities; Japanese media: Japan is considering providing subsidies to Tesla charging stations in tariff negotiations with the United States, or is unable to reach a trade agreement with the United States before the end of July; the South Korea-US trade agreement may be reached after the July 8 deadline.
Russia-Ukraine progress: Russia-Ukraine negotiations last only two hours. Russia demanded Ukraine withdrawal as a condition for a ceasefire. Ukraine believed that Russia's demands were "unacceptable and the negotiations were fruitless" and proposed Russian-Ukraine presidential talks. The two sides reached an agreement on the exchange of 1,000 prisoners of war and agreed to continue negotiations after submitting the terms of the ceasefire. Regarding the "Puze Society", the Russian official said: It is possible.
Trump: We must meet with Putin and will speak with Putin at 10 a.m. Monday. If we cannot reach an agreement on Ukraine, we will impose "destructive" sanctions on Russia.
Summary of institutional views
xmaccount.comprehensive market review after US bond credit rating is downgraded
Eric Beiley, executive director of Wealth Management at StewardPartners, said this is a warning sign. The U.S. stock market is about to hit its peak after a popular rebound. This may eventually stimulate fund managers to make some profit after buying stocks on a large scale in the past month. JonesTrading Chief Market Strategist Michael O'Rourke said that the stock market is expected to experience a round of profit-taking after a strong rebound. Keith Lerner, chief investment officer of TruistAdvisoryServices, said that this will not change the rules of the game, but it does provide investors with an excuse to take away a little profit. Some people also believe that the downgrade of the US credit rating this time has little impact. Rounhill Dave Mazza, CEO of Investments, said the market may have seen a decline in U.S. credit conditions for some time. The cut xmaccount.comes as the market is already alert to fiscal dysfunction and tariff risks, which means the impact on the stock market may be smaller than the initial headlines suggest. Dan Greenhouse, strategist at Alternative Asset Management, said, "The United States faces a huge budget deficit in peacetime, which may be something we have never seen in our lives. But we all know. Moody hasn't told us anything new."
Mitsubishi UF: Once the Fed misses the July rate cut window, it may repeat last year's script
After experiencing recent policy volatility, we are in a data vortex, and it's difficult to assess the true health of the economy. However, we still believe that the damage has been caused after the shock of the U.S. tariffs. These volatility is likely to only exacerbate the already weak trend by 2025. Therefore, we believe that the rebound in risk sentiment has not changed the medium-term macro outlook. However, due to tightening financial conditions (i.e., the recent risk market gains have all been taken off), from now until June, there may not be enough time or data to convince the Fed to cut interest rates.
We believe that the longer the Fed waits, the more passive they tighten their policies. However, it is not what they should do, but what they will do. Therefore, we postpone the next rate cut from June to July, but increase the number of cuts of 25 basis points in 2025 to four. We are xmaccount.compressing the rate cuts to make it happen in the second half of this year. We believe that the Fed will maintain two rate cuts in the June dot chart and increase the number of rate cuts to three times in the September dot chart, as the unemployment rate will exceed 4.4%.
We believe that July is a good time to restart interest rate cuts, as budget agreements may also be reached after the first 90-day tariff extension. Before the rate cut in September, there was also the Jackson Hall central bank annual meeting during the period. We again expect the data to deteriorate during this period. If the Fed skips the July rate hike, theyIt is possible to repeat the same mistake in 2024, which is to cut interest rates by 50 basis points in September and may also cut interest rates in October. Overall, the Fed has a chance to resume neutral interest rates later this year, avoiding having to cut rates.
Dansker: Raising U.S. Treasury yield expectations
The tone of settlement in recent trade conflicts has jointly increased the possibility that the Federal Reserve/ECB will take a more cautious attitude towards interest rate cuts, and new concerns about the U.S. fiscal outlook are also one of the factors. We estimate that the latter justifies the higher maturity premium at the long end of the U.S. Treasury yield curve, which will also partially spill over into Europe. Therefore, we raise the U.S. 10-year Treasury yield forecast from 4.20% to 4.50%, while the corresponding German Treasury yield forecast from 2.50% to 2.60% (mainly due to the spillover effect of the U.S. bond market). We maintain our forecast for the euro 10-year swap rate of 2.40%, and swap spreads are expected to turn negative again due to the increase in U.S. and European bond supply.
As the trade policy stance changes, the Federal Reserve has another reason to take a wait-and-see stance. Coupled with the continued stability of key U.S. data such as the labor market, this poses a challenge to our June rate cut expectations. Recently, the market has delayed the next rate cut to September.
Dutch Bank: EUR/USD is expected to reach 1.15 as U.S. outlook weakened U.S.
After Trump announced tariffs on April 2, a surge in U.S. recession concerns triggered a rapid exit from 'exceptionist' deals, which overwhelmed the dollar's traditional safe-haven appeal. Although other currencies will continue to weaken the dollar's dominance as a global reserve currency, the dollar will remain a significant lead for many years to xmaccount.come.
In line with this, we expect the safe-haven nature of the US dollar to recover in the xmaccount.coming months. The exact timing may depend on whether the risk of a U.S. recession increases or decreases, as this will guide net inflows and outflows of U.S. dollar assets. Against the backdrop of weak U.S. economic outlook, we maintain our 12-month forecast for EUR/USD 1.15 and USD/JPY 140.00.
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