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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market xm-bx.commentary]: Non-agricultural surprises surged in September, and many hawkish officials from the Federal Reserve spoke out." Hope this helps you! The original content is as follows:
On November 21, in early trading in the Asian market, spot gold was trading around US$4,070. The price of gold came under pressure on Thursday and fell due to the strong employment data in the United States in September and the possibility of the Federal Reserve cutting interest rates in December. The possibility is reduced; U.S. crude oil traded at $58.64/barrel, and oil prices fell in shock on Thursday. Although U.S. crude oil inventories fell more than expected to bring support, the news that the United States promoted Russia-Ukraine peace talks triggered concerns about oversupply, which ultimately suppressed market sentiment.
The U.S. dollar continued its gains against most major currencies on Thursday, with the U.S. dollar index rising 0.1% to 100.18, testing the six-month high set in early November. Markets reacted to signs of strong U.S. job growth in September, further weakening the chances of the Federal Reserve cutting interest rates in December.
The delayed U.S. non-farm payrolls report for September showed that 119,000 jobs were added, far exceeding the expected increase of 50,000, but the unemployment rate rose to 4.4% from 4.3%. Uto Shinohara, senior investment strategist at MesirowCurrencyManagement, pointed out: "Higher-than-expected employment data gave the Federal Reserve fewer reasons to cut interest rates, but the market is still in a data vacuum."
The yen fell 0.26% against the U.S. dollar to 157.59 yen, once hitting 157.89, the highest since January. Traders expect Japanese authorities may intervene near the 160 mark, as they did in July last year. Japan's Chief Cabinet Secretary Minoru Kihara once again expressed his stance, calling the exchange rate "sharp, unilateral and worrying."
Cleveland Fed President Hammaker reiterated his opposition to further interest rate cuts, warning that lower interest rates may exacerbate financial stability risks. At the same time, the Japanese government is preparing to launchA xm-bx.comprehensive economic stimulus plan with a scale of more than 20 trillion yen is expected to be announced by Prime Minister Takaichi Sanae on Friday.
According to the CME Group’s FedWatch tool, the market’s current expected probability of a 25 basis point interest rate cut in December is 39%. The euro fell 0.06% against the dollar to $1.1533, hitting its lowest level in two weeks; the pound rose 0.23% against the dollar to $1.3087, but was still close to its lowest level since the beginning of the month.
Bank of Japan board member Junko Koeda issued one of the clearest hawkish signals in recent months, arguing that real interest rates are still "significantly low" and must return to "equilibrium" to avoid "unexpected distortions" in the future.
With Japan's output gap hovering near zero, labor market tensions intensifying and staff shortages widespread, she said in her speech that the current economic environment supports continued normalization. She believes the Bank of Japan should "continue to raise interest rates" as economic conditions improve and adjust monetary support based on a recovery in overall activity and prices.
Xiao Zhi emphasized that the underlying inflation rate is close to 2%, but to continue to achieve the target, the central bank needs to test "whether the underlying inflation is stable or anchored." This means looking beyond the overall data to assess whether price momentum can be maintained as temporary factors subside.
Her message contrasted with recent political pressure for cautious tightening, further deepening the divide between policymakers seeking gradual normalization and government support for longer-term xm-bx.compromise.
U.S. non-farm employment rose sharply in September, increasing by 119,000, higher than the expected 53,000, which fully made up for the decrease from 22,000 to -4,000 in August. Stronger headlines suggest that hiring momentum has not stalled as much as expected.
However, the details of the report are more xm-bx.complex. The unemployment rate edged up to 4.4% from 4.3%, slightly higher than expected. Nonetheless, this increase was accompanied by a slight increase in the participation rate from 62.3% to 62.4%, indicating that more workers entered the labor market.
Wage growth slowed, with average hourly wages rising only 0.2% month-on-month, lower than the market consensus of 0.3%, bringing the year-on-year growth rate to 3.8%. The average workweek remained at 34.2 hours, showing no decline in working hours.
Taken together, the data show that the economy is still creating jobs but that wage pressures have eased - something that is likely to be welcomed by the Federal Reserve as it assesses whether another interest rate cut is necessary before the end of the year.
Cleveland Fed President Beth Hammack made it clear today that there are significant risks to further cutting interest rates while inflation remains above target. She believes that easing policy to cushion the labor market risks "prolonging this period of high inflation" and may further encourage "risk-taking behavior" in an already buoyant financial environment.
She noted that financial conditions were "fairly loose" with stock prices stable and credit flowing freely, which allowed additional moneySupport can be counterproductive.
Hamaker also warned that lowering short-term borrowing costs could distort asset pricing and credit risk signals. Such distortions could leave the economy facing a sharper downturn later on, she said.
She rejected the idea that interest rate cuts would act as "insurance" for the labor market, saying policymakers must recognize that such insurance may "come at the cost of increased risks to financial stability."
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