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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Official Website]: Seven Major Events to Become the Global Market this week". Hope it will be helpful to you! The original content is as follows:
When will the Federal Reserve cut interest rates? This issue aihuatrade.competes with the Israel-Iran war and the fate of the United States imposing tariffs on its peers. There is more to be brewing.
1. Tensions in the Middle East continue to heat up
Will the war between Israel and Iran kill the oil supply in the region? The two Middle Eastern countries have been in fierce firefighting since early Friday, with no signs of ending.
The scenarios include the collapse of the Iranian regime and the expansion of war, which may drag down the United States (US) and other countries.
The oil price has risen sharply, but if the Strait of Hormuz is closed and crude oil transport ships cannot pass through the Persian Gulf, the rise will continue significantly.
Gold also benefits from this, and the US dollar (USD) has been re-appreciated as a safe-haven asset. Will this trend continue? If the conflict continues without escalation, the dollar may lose some territory, in line with the trends so far this year.
2. Trade negotiations focus on the EU and China
Will Europe and the United States be closer? As leaders head to the North Atlantic Treaty Organization (NATO) summit, hopes of transatlantic trade finding a better foundation are growing. A strong euro/dollar may help ease tensions.
These negotiations follow a consensus between the United States and China to implement the agreement, while the relationship between the two countries remains fragile.
U.S. President Donald Trump has set a number of letters to impose new tariffs until the end of June Beijing time to send unilateral tariffs, and implemented the "reciprocal tariffs" announced in April in early July. He was encouraged by a court ruling that kept current policies unavailable until a new July 31 hearingChange.
The progress of any trade agreement will boost stocks and the dollar, while conflicts will boost the euro and gold.
3. The Bank of Japan (BoJ) may lower its rate hike expectations
Tuesday, earlier in the Asian session. The Bank of Japan (BoJ) has been publicizing further rate hikes for several months, but now there are fewer reasons for such moves. Although the rise in rice prices has attracted media attention, other costs have remained moderate in recent months.
The Bank of Japan has raised interest rates three times in the current cycle, raising the interest rate from negative -0.10% to the latest 0.50%.
Bank of Japan Governor Kazuo Ueda and his colleagues may keep interest rates unchanged at this time and may send a signal that there will be no further rate hikes in the near future. The yen (JPY) has fallen from its April high and may face further pressure.
4. U.S. retail sales may show weak consumption
Tuesday, 20:30 Beijing time. There seems to be no restrictions on U.S. consumers – but tariffs may ultimately impact spending. Lower-than-expected inflation data last month suggests consumers are less responsive to higher costs.
More importantly, the increase in purchases at the beginning of the year may have responded to tariffs in advance, and now it may lead to a decrease in spending.
Total retail sales rose 0.1% in April and are likely to decline slightly now. The retail sales control group fell 0.2% at that time and may continue to decline after two months of strong growth.
5. Unemployment benefits application may have a last-minute impact on the Federal Reserve
Wednesday, Beijing time at 20:30. Weekly unemployment benefits applications will be announced Wednesday due to the U.S. Liberation Day holiday. This makes this high-frequency release just before the Fed's decision, which may trigger some tense transactions.
The figures above 250K will put pressure on the dollar while pushing gold up, while dropping to 200K will have the opposite effect.
6. Fed decisions depend on the crucial dot map
On Thursday, 2:00 Beijing time, the press conference was held at 2:30 Beijing time. Is the Fed about to resume its rate cut cycle? Not this time, but the U.S. economy shows signs of weakness.
First, recent inflation data were unexpectedly low, with the core consumer price index (CPI) only up 0.1% in May. Tariffs have not been passed to consumers yet, so the Fed may remain cautious.
In terms of the central bank's second task, employment, data are mixed: the latest non-farm employment (NFP) report shows that 139K new jobs were added, exceeding expectations, but the trend was downward.
Fed Chairman Jerome Powell and his colleagues will keep interest rates unchanged at this time - they don't like to bring surprises to the market. However, the intention to act faster than previously expected may be reflected in the "dot map" - forecasts issued by officials every three months.
In March, the dot map shows 20There will be two interest rate cuts in 25 years. Many people prefer to make adjustments only once. This time, the balance may tend to support those who have cut interest rates twice.
The statement may also be more dovish. In its latest decision in May, Powell said tariffs are equally far from inflation and unemployment risks. There may be some changes this time, and the statement may tend to be risky on their employment tasks.
Finally, but equally importantly, Powell will take the stage to answer reporters' questions. In addition to trying to make it clear to him about the next Fed move and current concerns, they may also ask him about his potential successor. In recent days, speculations have continued to emerge that Trump may nominate a more modest and dovish chairman.
7. The UK is about to usher in a continuous rate cut
Thursday, 19:00 Beijing time. The Bank of England (BoE) has taken a cautious approach to rate cuts, as core inflation remains high and the economy continues to grow. However, things may have changed recently, with unemployment rising to 4.6% in April and the economy shrank by 0.3% in April.
This could prompt Bank of England Governor Andrew Bailey and his colleagues to cut interest rates for the second consecutive time, the first consecutive rate cut since early 2020. Market expectations will remain unchanged, but the possibility of interest rate cuts cannot be ruled out.
In addition to decision-making, investors will also focus on voting patterns within the Monetary Policy aihuatrade.committee (MPC). In May, there was a tripartite disagreement between the majority that supported the 25 basis point (bps) rate cuts that kept borrowing costs unchanged and the choice of a 50 basis point double rate cut.
If many people tend to cut interest rates, the GBP will suffer more losses than under the greater consensus scenario.
The week that includes Fed decisions is always eye-catching—especially when Trump was president. The banking holiday in the United States on Thursday added more suspense. Please be cautious when trading.
The above content is all about "[Aihua Forex Official Website]: Seven Major Events Will Happen in the Global Market This Week". It was carefully aihuatrade.compiled and edited by Aihua Avatrade Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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