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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Forex]: a collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
Core Overview: On April 10, the foreign exchange market showed a pattern of "geotropic relaxation suppressing the US dollar, central bank policy differentiation leading to Africa and the United States, and data expectations disturbing the short term." The U.S.-Iran ceasefire negotiations, the fall in risk premiums in the Middle East, and the rising expectations for an interest rate cut by the Federal Reserve constitute the core positive factors throughout the day; while the vulnerability of the ceasefire, the IMF's downward revision of global growth, supply disturbances in the Middle East, and central bank policy differences constitute the main negative factors, and the foreign exchange market as a whole remains highly volatile and highly sensitive.
1. Good news: Risk appetite has been restored, the dollar has weakened, and non-U.S. countries have generally benefited
The U.S.-Iran ceasefire has taken effect, and geopolitical risks have significantly cooled down (the strongest positive). The U.S.-Iran temporary ceasefire has officially xmaccount.come into effect on April 8, Iran has opened the Strait of Hormuz, and about 20% of global oil transportation has returned to smooth flow. On April 10, the two sides opened the first round of negotiations in Islamabad, Pakistan, and Trump stated that he was "very optimistic about the agreement." The demand for safe havens fell rapidly, and the U.S. dollar index fell for four consecutive days, hitting a new low since March. Non-U.S. currencies such as the euro, pound, Australian dollar, and renminbi strengthened across the board, and risk sentiment recovered significantly.
Expectations of a rate cut by the Federal Reserve have increased, and the dollar has been under pressure. The market's probability of a rate cut by the Federal Reserve in June has risen to 43%. Federal Reserve officials Collins and Logan took a dovish stance, acknowledging the room for interest rate cuts within the year, and only emphasized the need to observe the impact of tariffs and inflation. U.S. bond yields fell, with the 2-year U.S. bond yield falling to 3.77%, further weakening the appeal of the U.S. dollar and benefiting the rebound of non-U.S. currencies.
The RMB appreciated strongly, emerging market currencies recovered, and the weakening US dollar added to China's economic resilience. The offshore RMB rose above the 6.83 mark, hitting a high in the past three years. The “safety premium” of Chinese assets is highlighted, and the whole worldGlobal funds increased their allocation of RMB assets. Emerging market currencies have strengthened simultaneously, and safe-haven funds have returned to high-yield currencies from the U.S. dollar, supporting the overall non-U.S. market.
The plunge in oil prices eased global inflationary pressure. WTI crude oil plunged 16.41% to US$94.41 per barrel, and Brent crude oil fell 13.29%. The fall in energy prices has reduced inflationary pressure in Europe and the United States, opening up space for the European Central Bank, the Bank of England, and the Reserve Bank of Australia to cut interest rates, which indirectly benefits currencies such as the euro, pound, and Australian dollar.
2. Bad news: There are concerns about the ceasefire, growth is downgraded, and policy differences are disturbing
There are huge differences in the US-Iran negotiations, and the ceasefire is fragile (the biggest negative). Iran proposed four core demands of "permanent ceasefire, lifting of sanctions, war reparations, and recognition of uranium enrichment" and emphasized that "without a ceasefire in Lebanon, the negotiations will be invalid." Israel continues to carry out air strikes on Lebanon, Iran threatens retaliation, and negotiations break down at any time. If the strait is closed again and conflicts resume, safe-haven buying of the U.S. dollar will quickly return, and non-U.S. currencies will pull back sharply.
The IMF lowered its global economic growth forecast. IMF President Georgieva announced that it will lower its global growth forecast for 2026 due to the drag on geopolitical conflicts. Energy supply shocks, rising inflation, and tightening financial conditions will suppress the global recovery. Expectations of economic slowdown are negative for risk currencies (Australian dollar, New Zealand dollar, Canadian dollar) and positive for the safe-haven Japanese yen and Swiss franc.
Central bank policy divergence intensified, non-U.S. internal weakening
Euro Zone: Construction PMI fell sharply in March, economic recovery was weak, and the European Central Bank’s dovish stance strengthened interest rate cut expectations, suppressing the euro’s gains.
UK: Inflation continues to fall, the market is betting that the Bank of England will cut interest rates in May, and the pound falls after rising.
Japan: Although the Bank of Japan is expected to raise interest rates, the interest rate differential between the United States and Japan is still high, and the appreciation of the yen is weak.
Australia/New Zealand: Unstable demand from China and a correction in xmaccount.commodity prices have put pressure on the Australian and New Zealand dollars.
Internal political and policy uncertainty in the United States
The personnel changes of the Federal Reserve Chairman are pending: the White House is pushing for Warsh to take office in May, while Powell refuses to leave due to criminal investigations. Uncertainty over policy transition disturbs market expectations. At the same time, Trump’s tariff policies have increased the risk of stagflation, made the Federal Reserve’s decision-making more difficult, and exacerbated dollar fluctuations.
3. Overview of the positives/negatives of core currency pairs
The U.S. dollar index: negative (ceasefire + interest rate cut expectations) > positive (risk aversion), short-term weak
EUR/USD: positive (risk appetite + weaker US dollar) > negative (ECB dovish), strong shock
GBP/USD: positive (weakening of the US dollar) = negative (European Central Bank) interest rate cut), consolidated at a high level
USD/JPY: Good (U.S.-Japan interest rate differential)>Bad (risk aversion cooled), high volatility
AUD/USD: Good (weakening of the U.S. dollar) USD/CNH: Bad (China's resilience + weakening of the U.S. dollar), the RMB is stronger Today’s core trading logic: geopolitical negotiation progress dominates the direction, and data expectations catalyze fluctuations. Long: Euro, RMB (negotiations go smoothly, US dollar continues to weaken) Short: U.S. dollar index, US-Japan (ceasefire is solid, interest rate cut expectations rise) Wait and see: Pound, Australian dollar (policy divergence, violent fluctuations) Risk control: Pay close attention to the news of the Islamabad negotiations, and immediately turn to risk aversion if it breaks down, long the US dollar and Japanese yen. The above content is all about "[XM Foreign Exchange]: Collection of good and bad news affecting the foreign exchange market". It is carefully xmaccount.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support! Every successful person has a beginning. Only by having the courage to start can you find the way to success. Read the next article now! IV. Trading strategy tips
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