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From interest rate cuts to interest rate increases, the conflict in the Middle East is rewriting the global market script! Non-agricultural week is coming
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The moon waxes and wanes, people have joys and sorrows, life changes, and the year has four seasons. If you survive the long night, you can see the dawn, if you endure the pain, you can have happiness, if you endure the cold winter, you no longer need to hibernate, and after the cold plums have fallen, you can look forward to the new year.
Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Official Website]: From interest rate cuts to interest rate increases, the conflict in the Middle East is rewriting the script of the global market! Non-agricultural week is xmaccount.coming." Hope this helps you! The original content is as follows:
As the situation in the Middle East continues to be tense, the core driving logic of the global market is gradually converging on energy prices and monetary policy paths. Although news about ceasefire negotiations has spread from time to time, the uncertainty that the conflict will not end quickly in the short term is continuing to suppress market sentiment and reshape global asset pricing.
The clouds of war have not yet dissipated, and oil prices have fluctuated at high levels and become the main line of the market
Although oil and gas prices have not continued to reach new highs recently, the overall price is still running at a high level. Supply risks brought about by conflicts in the Middle East have not significantly eased inflationary pressures.
This change is reflected in the trends of various assets: the stock market and bond market are generally under pressure, while the US dollar remains strong. At the same time, the safe-haven appeal of gold has weakened, indicating that in the current environment, investors prefer to hold cash rather than traditional safe-haven assets.
Although U.S. President Trump has repeatedly emphasized that the war situation is beneficial to the United States and hinted that Iran is interested in reaching an agreement, the market remains cautious about the prospects for peace. On the one hand, Iran continues to reject the plan proposed by the United States; on the other hand, the United States' military deployment in the Middle East is still increasing. These signals have strengthened the market's concerns about the possible escalation of the conflict.
However, if the ceasefire negotiations make substantial progress, market risk appetite is expected to rebound quickly, and investors' attention will shift back to economic fundamentals.
From interest rate cuts to interest rate increases, the market has xmaccount.completely rewritten interest rate expectations
At the macro level, one of the most significant changes is the market’s repricing of the Fed’s policy path.
At present, most Fed officials still emphasize the resilience of the labor market while being wary of inflation risks. The market has alsoThe government has gradually accepted this hawkish stance: Not only have short-term interest rate cut expectations been basically fully digested, but the possibility of interest rate hikes has even begun to be taken into account.
As of now, the market has priced in an interest rate hike of about 18 basis points, which means that once subsequent data continues to verify the stickiness of inflation or economic resilience, the expectation of a 25 basis point interest rate hike will quickly form a consensus.
Employment and PMI have become market indicators
This week’s market focus will be on a series of key economic data in the United States, the most important of which is undoubtedly the non-farm payrolls report.
Previously, U.S. employment unexpectedly decreased by 92,000 people in February. Therefore, the market’s focus on March data is not only whether there will be a rebound, but also whether the previous value has been revised upward.
The current market expects about 48,000 new jobs to be created in March, while the unemployment rate may rise slightly from 4.4% to 4.5%. If the data continues to show that the job market is resilient, it will further strengthen expectations that "high interest rates will remain high for longer."
Unless the employment data continues to deteriorate significantly, expectations for interest rate cuts will be difficult to significantly return. Once the economy weakens but inflation remains high, the pressure on the stock market may intensify.
In addition, indicators such as ISM service industry PMI, manufacturing PMI and job vacancies will also provide the market with more signals about economic momentum and inflationary pressure.
Europe is facing greater pressure and the European Central Bank may be forced to raise interest rates
xmaccount.compared to the United States, Europe is in a more vulnerable position in this round of energy shocks. Due to high reliance on energy imports from the Middle East, rising oil and gas prices have a more direct impact on inflation in the euro area.
The market currently generally expects that the European Central Bank and the Bank of England will raise interest rates at least twice this year, and possibly even three times. The latest data shows that inflation in the euro area has shown signs of picking up. If the data in March continues to rise, it will further strengthen expectations of an early interest rate hike.
The market currently predicts that the probability of the European Central Bank raising interest rates by 25 basis points at the April meeting is about two-thirds. Once inflation data exceeds expectations, the euro may find support.
Inflation pressure and growth concerns coexist, leaving Japan in a dilemma
Japan also faces the xmaccount.complex situation caused by energy shocks. Since about 90% of crude oil is imported, any disturbance in the Strait of Hormuz could pose a threat to Japan's energy supply.
Rising oil prices not only directly push up fuel costs, but also further amplify inflationary pressure through the depreciation of the yen. However, market expectations for the Bank of Japan to raise interest rates remain relatively modest, with only two rate hikes in 2026 currently included.
At the heart of this disagreement are growth concerns. Rising energy costs may suppress corporate profits and consumption capabilities, thereby limiting room for policy tightening.
However, if the March inflation data in Tokyo rises above 2% again, the Bank of Japan's expectations for interest rate hikes may further increase, thus providing some support for the yen.
The above content is about "[XM Foreign Exchange Official Website]: From interest rate cuts to interest rate increases, the conflict in the Middle East is rewriting the global market script! Non-agricultural WeekThe entire content of "The Big Break" was carefully xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thank you for your support!
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