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Hello everyone, today XM Forex will bring you "[XM Group]: The Federal Reserve's interest rate cut expectations boosted, and the U.S. dollar index came under short-term pressure and fell." Hope this helps you! The original content is as follows:
In the Asian session on Thursday, the U.S. dollar index fluctuated around 99.50. Global foreign exchange markets showed divergent trends on Wednesday. The Japanese yen fell back after experiencing a brief boost from the Bank of Japan's interest rate hike expectations, while the pound strengthened significantly after the announcement of the British budget. The U.S. dollar was under pressure as the market maintained expectations of the Federal Reserve's interest rate cut in December. The U.S. dollar index continues to weaken, and the market's expected probability of the Federal Reserve cutting interest rates in December remains at 85%. Investors are betting that White House economic adviser Hassett, who is likely to take over as Fed chairman, will adopt more dovish policies, adding to the dollar's weakening outlook. U.S. Treasury Secretary Bessent previously said that Trump is likely to announce the new chairman before Christmas.
US dollar: As of press time, the U.S. dollar index is hovering around 99.50. The U.S. dollar index, as a key index that measures the strength of the U.S. dollar against a basket of six core currencies, was affected by multiple factors on Wednesday, showing a trend of downward pressure and encountering multiple resistances. At the same time, the sudden congestion of short positions in the market hid the risk of a rapid rebound. Technically, the U.S. dollar index has continued to operate in a downward channel recently, maintaining a weak overall arrangement. The price has fallen below the short-term moving average www.xmxmxm.cnbination and has been suppressed by the 9- and 20-day moving averages many times, indicating obvious selling pressure from above. The RSI on the 14th is below neutral, pointing to weakening momentum. At the same time, DXY is approaching the 98.90-99.20 support band near the previous low area. Once it falls below this range, the index may further drop to around 98.50; if it rebounds in the short term, the top 100.30-100.60 will constitute the primary resistance. On the whole, the technical side resonates with the fundamental side, and the short-term trend is still biased towards the downward structure.
The Federal Reserve’s Beige Book shows that U.S. economic activity has changed little in recent weeks, but overall consumer spending has further declined, with the exception of high-end consumers. A survey report released on Wednesday showed a slight decline in employment and a moderate increase in prices. “Overall, the outlook is basically unchanged."The report reads. "Some sources pointed to rising risks of slowing economic activity in the www.xmxmxm.cning months, while manufacturers showed some optimism. The report is based on www.xmxmxm.cnrmation collected by the Fed's 12 regional banks through Nov. 7 and www.xmxmxm.cnpiled by the Dallas Fed. The unofficial report on business and consumer conditions has attracted more attention as the longest government shutdown in U.S. history disrupted the collection and release of key economic data. Fed officials won't have access to the October and October rates until after their December rate meeting. Most labor market and inflation data for November. The absence of official data at the national level has deepened disagreement among Fed officials on whether to cut interest rates next month. Market bets on the December meeting have fluctuated between a rate cut and no rate, but traders now believe that a rate cut in December is possible after two officials who usually share the preferences of Chairman Jerome Powell.
The British Office for Budget Responsibility (OBR) leaked the details of the budget in advance on Wednesday and attributed the error to a technical error. The disclosed www.xmxmxm.cnrmation showed that people paid income tax. The threshold freeze was extended for a further three years in the budget, until April 2031. This means more people will pay higher income tax rates as wages rise. In addition, from April 2026, the cap on the second-child benefit in the UK will also be lifted from April 2028. A new mileage tax will be levied on cars. The government also plans to impose a new tax on houses worth more than 2 million pounds.
The UK is considering expanding its treasury bill issuance plan, a move that may help develop the pound currency market and meet the needs of stable currency issuers. The British Debt Management Office (DMO) will launch consultations on "expanding and deepening" the ultra-short-term debt market in January. Other governments, including the United States, have relied more on treasury bills to meet financing needs.
The UK’s official budget watchdog mistakenly published an analysis before Chancellor of the Exchequer Rachel Reeves’ speech that she would expand the key fiscal buffer to 22 billion pounds ($29 billion) from 9.9 billion pounds in March. The buffer amount is the highest in the UK’s fiscal plan since March 2022, far exceeding the 15 billion pounds given by banks surveyed by Bloomberg. The key data came amid an unprecedented early release of budget analysis by the Office for Budget Responsibility. The expansion of fiscal buffers was achieved through tax increases, including new taxes on industry and high-end real estate.Traders struggled to digest the conflicting signals sent by the report. The Office for Budget Responsibility confirmed the authenticity of the report, saying a link to its forecasts was published "prematurely" on its official website. The agency apologized for the mistake and said it had launched an investigation.
According to a report by the Belarusian National News Agency on the 26th, Belarusian President Lukashenko said on the same day that he is willing to restart Russia-Ukraine peace talks in the capital Minsk. Lukashenko made the above statement when he met with Russian President Vladimir Putin on the same day during a meeting of the Collective Security Council of the Collective Security Treaty Organization (CSTO) in Bishkek, Kyrgyzstan. Lukashenko said that Belarus maintains dialogue with the United States and other Western countries, and as an ally of Russia, it is reasonable for Belarus to participate in coordination operations on the Ukraine crisis. Putin emphasized Lukashenko's contribution to resolving the Ukrainian crisis. He said that the first contact between Russia and Ukraine to peacefully resolve the crisis was carried out in Belarus with the direct participation and support of Lukashenko and achieved results. Russia is willing to www.xmxmxm.cnrm Belarus of relevant progress. In addition, the two sides also exchanged views on issues such as ensuring the national security of the Russian-Belarusian alliance.
The continued appreciation of the yen may bring about a turnaround for the Korean won - the Korean won this quarter The worst-performing currency among Asian emerging market currencies, and now as the sensitivity of the two currencies to changes in U.S. interest rates and global risk sentiment has increased, the Korean won-Japanese yen linkage has soared to its highest level since 2007, ranking first among Asian currency pairs. "The Korean won has shown a higher sensitivity to volatility against the Japanese yen," Citigroup strategist Rohit Garg said. The market is currently looking for the yen to continue its rebound after hitting a ten-month low last week, which may lead to a stronger Korean won. Woori Bank pointed out that the trend of the yen is tied to a rare scenario: the monetary policies of the United States and Japan tend to converge. Min Jingyuan, an economist at the bank, analyzed: "The expectation of an interest rate hike by the Bank of Japan supports the downward forecast of the exchange rate of the US dollar against the yen. If the Fed cuts interest rates, it will strengthen the upward pressure on the yen. Once the yen strengthens, the Korean won is likely to follow suit."
The Australian economy is achieving a soft landing, GDP remains stable, and the job market is becoming saturated. Although the current situation is good, interest rates may be raised earlier than widely expected. National Australia Bank chief economist Sally Alder pointed out that there are multiple signs that the economy is approaching the limit of production capacity, which means that the RBA's interest rate cutting cycle has ended. She added that based on the economic situation of a soft landing, the Reserve Bank of Australia may need to consider starting the process of raising interest rates as early as the first half of 2026.
JP Morgan economists have changed their forecasts and believe that the Federal Reserve will start cutting interest rates in December.This reversed the bank's judgment a week ago that policymakers would delay cutting interest rates until January next year. A research team headed by Michael Feroli, the bank's chief U.S. economist, said on Wednesday that statements by a number of heavyweight Federal Reserve officials, particularly New York Fed President Williams, in support of a recent interest rate cut prompted them to reassess the situation. After last week's delayed September jobs report, JPMorgan originally forecast interest rates would remain unchanged in December. JPMorgan Chase currently expects the Fed to cut interest rates twice by 25 basis points in December and January next year. "We have re-targeted the final interest rate cut in January next year," Feroli wrote in a report to clients. "Although the outcome of the next FOMC meeting is still uncertain, we believe that the latest round of Fed officials' statements have tilted the balance towards a December interest rate cut."
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