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U.S. Commerce Department considers imposing tariffs on more imported auto parts, waiting for the Fed to cut interest rates
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The US Department of xmaccount.commerce is considering imposing tariffs on more imported auto parts, waiting for the Federal Reserve to cut interest rates." Hope it will be helpful to you! The original content is as follows:
On Wednesday, on September 17, spot gold trading was around $3,693.70/oz, and gold prices hit a historical high of $3,702.93/oz on Tuesday, as the market bets that the Federal Reserve cut interest rates this week, driving gold prices to continue to rise under the help of safe-haven demand, buying from central banks and weakening of the US dollar. U.S. crude oil trading was around $64.61/oz, and oil prices rose on Tuesday. Traders weighed the possibility that Ukrainian drone attacks Russian ports and refineries could lead to a disruption in Russia's supply, and were waiting for the Federal Reserve's decision on interest rates.
The dollar fell across the board on Tuesday, hitting a four-year low against the euro, and investors firmed their bets on the Fed's interest rate cut this week.
The dollar has stabilized in recent months after a sharp decline earlier this year, but the dollar has once again faced selling pressure as market expectations for the Fed to resume rate cuts heat up and U.S. President Trump once again called for radical easing policies.
The market expects the Federal Reserve to cut interest rates by 25 basis points on Wednesday, with the rapid softening of labor market data being the main driving factor for the increase in interest rate cut bets in recent weeks.
Karl Schamotta, chief market strategist at Corpay, said: "The dollar fell sharply across the board, investors are ready to welcome Wednesday's voting record, economic forecast summary 'dot chart' and dovish information in the press conference."
The Federal Reserve will issue a policy statement at 2 p.m. on Wednesday, and Chairman Powell will then preside over the press conference. "Powell and his colleagues are expected to downplay inflation risks and express clear tendencies to support the labor market, which could create conditions for continuous rate cuts in the xmaccount.coming months - TransactionsThe staff are adjusting their positions to prepare for asymmetric trends in most major currency pairs. ”
Data shows that U.S. retail sales grew more than expected in August, but hardly gave the dollar a respite. Investors are still worried about U.S. economic growth amid weak labor market and rising xmaccount.commodity prices due to import tariffs.
National Bureau of Statistics data shows that business employment fell for the seventh consecutive month in August, with the private sector, closely watched by the Bank of England slowing to 4.7% for the three months to July, and a 4.8% increase in June. Following the August rate cut, the Bank of England is expected to remain calm this week.
Asian market
Japan's trade deficit narrowed to -242.5B yen in August, less than expected -5 13.6B yen, as exports performed better than expected. Overall exports fell only 0.1% year-on-year to 8425B yen, exceeding the expected year-on-year decline of 1.9%. However, imports fell -5.2% year-on-year to 8668B yen, a decrease of more than expected year-on-year contraction of -4.2%.
Details highlight the obvious differences. Exports to the United States fell -13.8% year-on-year, the largest decline since February 2021, with automobiles falling -28.3% year-on-year and chip manufacturing equipment falling -38.9% year-on-year. In contrast, shipments to Asia increased by 1.7% year-on-year, while exports to Western Europe increased by 7.7% year-on-year. Exports to mainland China fell 0.5% year-on-year, but shipments to Hong Kong 14.4%.
Australia's Westpac Leading Index's growth rate fell to negative territory in August, falling from 0.11% to -0.16%. This is the first reading below the trend since September 2024, a sharp slowdown from the peak of 0.86% in February.
WestPacific noted that the weakness was “not overly worrying” but stressed the "significant weakness" earlier this year, consistent with the economy's slowdown after a relatively strong June quarter. It expects 1.9% growth in 2025, better than 1.3% growth in 2024, but remains below the trend and will only resume the trend speed in 2026.
The RBA will meet from September 29 to 30 Policymakers will almost certainly stabilize cash rates at 3.6%. Westpac believes that upcoming data should ultimately verify benign inflation and weak demand, paving the way for a 25 basis point cut in November, followed by two more rates in 2026. Currently, the RBA will act cautiously to observe the confirmation of potential trends before relaxing again.
European market
Germany's ZEW economic prosperity index rose more than expected, climbing to 37.3 from 34.7 to 37.3, xmaccount.compared to 25.0. This improvement highlights the growing optimism among financial market experts, especially for export-oriented industries. However, the status quo has further deteriorated from -68.6 to -76.4, below the forecast-65.0 in the period.
In the euro zone, the ZEW sentiment index also improved, rising from 25.1 to 26.1, higher than the market expectations of 20.3. The current situation indicator rose slightly by 2.4 points to -28.8.
ZEW President Achim Wambach pointed out that although sentiment indicators have stabilized, "the economic situation has deteriorated" and major risks still exist. He cites uncertainty in U.S. tariff policy and Germany's upcoming "Autumn of Reform". The outlook for automotive, chemical, pharmaceutical and metals has improved, but sentiment in these industries remains in negative areas, indicating a fragile recovery prospect.
Eurozone industrial production increased by 0.3% month-on-month in July, lower than expected by 0.5% month-on-month. Output was supported by intermediate goods (+0.5%), capital goods (+1.3%) and consumer goods, with durable and non-durable goods output increasing by 1.1% and 1.5% respectively. However, a sharp drop in energy production -2.9% limits overall growth.
In the entire EU, industrial production increased by 0.2% month-on-month. Croatia led the gains with a 2.6% gain, followed by Hungary and Slovenia, each up 2.1%, while Estonia (-5.5%), Malta (-4.7%) and Sweden (-3.9%) fell sharply.
UK labour market data for August showed signs of further tension, with employment falling by -8k this month, continuing a steady decline since its third quarter 2024 peak. The number of claims increased by 17.4k, down from the expected 20.3k. The median monthly salary increased by 6.6% year-on-year, up from 6.0% in July, highlighting the ongoing wage pressure.
In the three months to July, the unemployment rate stabilized at 4.7%, in line with expectations. The average income excluding bonus fell slightly from 5.0% to 4.8%, while the average income including bonus rose slightly from 4.6% to 4.7%. Overall, data show that job loss continues, but wage growth is still strong enough to keep the Bank of England cautious about policy.
U.S. market
U.S. retail sales unexpectedly rose in August, up 0.6% month-on-month to US$732.0B, far higher than expected 0.2% month-on-month. The core categories also achieved strong results, with sales excluding automobiles up 0.7% month-on-month to USD592.3B, and sales excluding gasoline up 0.6% month-on-month to USD680.3B. Sales, excluding cars and gasoline, rose 0.7% month-on-month to $540.1B, indicating strong strength of a wide range of consumers.
The latest data confirms that household spending is flexible despite high borrowing costs and slowing labor market conditions. From June to August, total retail sales increased by 4.5% year-on-year, continuing steady growth, highlighting the role of consumers as a key driver of U.S. activities.
Canada's overall CPI rose to 1.9% year-on-year in August, higher than in July1.7%, but slightly below market expectations of 2.0%. This increase was mainly due to a small year-on-year decline in gasoline prices, which fell by -12.7% year-on-year in August, while in July, down by -16.1% year-on-year. Excluding gasoline, inflation rose 2.4% year-on-year, slightly slowing from the year-on-year rate of 2.5% that has continued in recent months.
Potential price pressure shows signs of further cooling. The median CPI stabilized at 3.1% year-on-year, while the CPI fell from 3.1% to 3.0% year-on-year, both in line with expectations. The CPI xmaccount.common indicator slowed to 2.5% year-on-year, below the 2.6% forecast, marking widespread weakness in inflation.
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