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Hello everyone, today XM Forex will bring you "[XM Forex Decision Analysis]: A collection of good and bad news that affects the foreign exchange market." Hope this helps you! The original content is as follows:
The daily trading volume of the foreign exchange market exceeds US$7 trillion. Recently, driven by global economic data, policy shifts and geopolitical risks, volatility has intensified. On November 21, traders need to focus on the long-short logic switching of major currencies. The following is a summary of the core good and bad news.
The RMB exchange rate has shown strong resilience and has become a bright spot in emerging markets. In October, the central parity rate of the RMB against the U.S. dollar hit a new high since November 2024. Domestic core CPI rose by 1.0% year-on-year, rising to the 1% mark for the first time in the past 19 months, signaling a clear economic recovery. The strengthening of the A-share market attracted the return of international funds, and the willingness of enterprises to settle foreign exchange increased simultaneously, jointly building a support barrier for the RMB exchange rate. On November 21, the central parity rate of RMB against the US dollar stabilized at around 7.0866.
Some emerging market currencies have been protected by central banks. The Central Bank of Ghana plans to inject US$1 billion into the market in November to deepen foreign exchange market reforms and stabilize exchange rate fluctuations, providing direct support for the Cedi exchange rate and boosting currency market confidence in the African region. The Australian dollar benefited from better-than-expected economic data, with inflation unexpectedly rising to 3.2% in November, reinforcing market expectations for tightening policy by the Reserve Bank of Australia, and becoming a strong representative of xm-bx.commodity currencies.
The US dollar faces multiple long-term worries. U.S. sovereign credit rating downgraded again, $270 trillion in debtThe continued fermentation of financial issues may weaken international investors' confidence in U.S. dollar assets. Although after the Federal Reserve cut interest rates by 25 basis points in October, Powell hinted that a rate cut in December was not an established fact. High interest rates support the short-term strength of the US dollar, but the lagging impact of credit rating downgrades deserves vigilance.
The weak economic recovery in the euro zone is dragging down the trend of the euro. Retail sales in the Eurozone fell by 0.3% month-on-month in November, lower than the 0.1% expected, and Q3 GDP only increased slightly by 0.2%, indicating a lack of economic growth momentum. Although the European Central Bank kept interest rates unchanged at 2%, the market's concerns about the economic outlook of the euro zone have increased. The euro has entered the consolidation stage against the US dollar and may test the 1.15 support level in the short term.
The pound is deeply trapped in the quagmire of stagflation. The high unemployment rate of 4.8% is in conflict with the sticky inflation of 3.8%. The game between the Bank of England's interest rate cut expectations and the weak economic recovery continues. There is a high probability that the pound against the US dollar will maintain a range-bound downward trend. In addition, the U.S. sanctions on Gazprombank caused sharp fluctuations in the ruble exchange rate, further impacting risk appetite in the global foreign exchange market.
Trump’s policy propositions after his election have become the biggest source of uncertainty. It plans to use tariffs to make up for the fiscal gap. If xm-bx.comprehensive tariffs are imposed on trading partners such as Mexico, Canada, and Japan, it will directly suppress the currency exchange rates of these countries. The current global average tariffs imposed by the United States have risen to a historical high of 18%-21%, and the risk of escalating trade frictions continues to disturb the foreign exchange market.
The linkage effect between geopolitics and xm-bx.commodities is highlighted. The situation in the Middle East pushed up the price of crude oil to US$98 per barrel, supporting the currencies of oil-producing countries such as the Saudi riyal, but at the same time increasing the depreciation pressure on the currencies of energy importing countries such as the Indian rupee. Traders need to pay close attention to the forward-looking data from the Federal Reserve's December policy meeting and the progress of APEC trade negotiations. These factors will dominate the subsequent trends of the U.S. dollar index and non-U.S. currencies.
The above content is all about "[XM Foreign Exchange Decision Analysis]: Collection of good and bad news affecting the foreign exchange market". It is carefully xm-bx.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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