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The dollar collapsed to a seven-week low, and gold hit record highs again and again! Is the Fed's interest rate cut storm coming?
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: The US dollar collapsed to a seven-week low, and gold hit a record high again and again! Is the Federal Reserve's interest rate cut storm xmaccount.coming?" Hope it will be helpful to you! The original content is as follows:
With the turbulent global financial markets, the US dollar exchange rate hit a nearly seven-week low on Tuesday (September 9), which attracted high attention from investors. The weak performance of U.S. employment data further strengthened market expectations for a sharp Fed rate cut, while political and economic turmoil in other parts of the world has also added more uncertainty to the market. From the cloud of corrections to the U.S. employment data, to the political crisis in the euro zone, to the Indonesian central bank's emergency intervention in the market, the global financial market is experiencing an unprecedented shock.
The dollar fell to a seven-week low, and market concerns increased
The dollar index once hit 97.24 during the Asian trading session on Tuesday, the lowest level since July 24. The decline is mainly due to investors' concerns about the preliminary correction of the upcoming U.S. employment data.
According to economists' forecasts, the increase in non-farm jobs in the United States may be downgraded by as much as 800,000 between April 2024 and March 2025. This data correction may indicate that the situation in the U.S. job market is far more severe than previously expected, directly challenging the Federal Reserve's ability to achieve full employment goals.
Alex Hill, managing director of Electus Financial, said: "The deterioration of employment data is shocking, which is gradually dragging down the performance of the dollar, and we expect this trend to accelerate."
The Fed's 50 basis point cut rate is expected to heat up, and the market bets to increase.
As the signal of weak employment data becomes more obvious, traders are taking more radical approaches to the Fed.Expectations of monetary easing policies are also heating up rapidly.
According to the FedWatch tool of the Chicago Mercantile Exchange Group (CME) , the probability of the Fed cutting interest rates by 50 basis points at its September meeting has risen slightly from 8% on Monday to 11.6%, and the cut of at least 25 basis points has almost been seen as a foregone conclusion by the market. Investors generally believe that the Fed may need to deal with the pressure of the slowdown through a sharp cut to stimulate economic growth and stabilize the job market.
The Trump administration puts pressure, and the Bureau of Labor Statistics continues to turmoil
At the same time, the political turmoil in the United States further adds uncertainty to the market.
According to the Wall Street Journal, citing unnamed sources, the Trump administration’s advisory team is preparing a report detailing the possible flaws in data statistics. The report is expected to be released in the xmaccount.coming weeks and may further shake market confidence in official data. Earlier, U.S. President Trump fired Erika McEntarfer, the Director of Labor Statistics last month, accusing him of forging employment data, although the allegation lacks substantive evidence.
U.S. Treasury investors expressed concern about this, believing that the White House's pressure to cut interest rates on the Federal Reserve and the rising long-term fiscal risks may be seriously underestimated by the market.
Gold prices hit record highs, and risk aversion sentiment is rising
With the weakening of the US dollar and intensifying economic uncertainty, safe-haven gold has performed well. Gold prices rose 0.65% on Tuesday to hit an all-time high of $3,659.17 per ounce, with six trading days in September setting record highs. Investor concerns about the global economic outlook and expectations of the Fed's easing policy have further strengthened the attractiveness of gold as a safe-haven asset.
The euro zone political crisis suppressed the appreciation of the euro
The euro had a slight appreciation of 0.14% during the Asian and European trading period, reaching a high of US$1.1779, the strongest level since July 24. However, the eurozone's political crisis has limited its room for further uptrends.
The French parliament on Monday overturned the government's plans to curb debt inflation, exacerbating political instability in the euro zone's second largest economy. The market generally expects that the ECB will keep interest rates unchanged at its policy meeting on Thursday. Analysts at the Netherlands International Group (ING) pointed out that the European Central Bank's possibility of further expansion of its easing policy is low, so the spillover effect on the financial market is expected to be relatively limited.
The yen strengthened against the trend, and Japan's political situation sparked speculation
The yen showed a strong rebound against the US dollar, reversing the weakness brought about by Japanese Prime Minister Shigeru Ishiba's resignation.
The US dollar fell 0.44% against the Japanese yen to 146.81 at one point. Speculation about Japan's next prime minister candidate is heating up, and investors are particularly concerned about the possible changes in macroeconomic policy that the new leadership has.
In other parts of Asia, the Indonesian rupee fell 0.8% as the government replaced the finance minister. To stabilize the market, the Indonesian central bank allegedly purchased longer-term government bonds on Tuesday in an attempt to calm market volatility.
Summary: The global market has entered a critical moment
At present, the global financial market is at a crossroads full of variables. The continued weakening of the US dollar, the weak U.S. employment data, and the rising expectations of Fed rate cuts have jointly shaped the market tension. Meanwhile, the political crisis in the euro zone, the uncertainty of Japan's political situation, and the market intervention of the Indonesian central bank have all added more xmaccount.complexity to the global economy. Investors need to pay close attention to the upcoming corrections to U.S. jobs data, as well as the latest policy trends from the Federal Reserve and the European Central Bank to better respond to future market volatility.
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