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The probability of the Fed's interest rate cut in October has increased significantly, Trump and Musk may "reconcile"
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Hello everyone, today XM Foreign Exchange will bring you "[XM Official Website]: The probability of the Federal Reserve's interest rate cut in October has increased significantly, and Trump and Musk may "reconcile". Hope it will be helpful to you! The original content is as follows:
On September 22, spot gold trading was around $3,686.57 per ounce, gold prices rose last Friday, rising for the fifth consecutive week. The market is paying attention to further clues after the U.S. Federal Reserve's first rate cut this year. The probability of the Federal Reserve cutting interest rates by 25 basis points in October is 91.9%; U.S. crude oil trading was around $62.50 per ounce, and oil prices fell last Friday, as concerns about a large amount of supply and a decline in demand exceeded expectations that the Fed's first rate cut this year would trigger more consumption. The EU xn--xm-6d1dw86k.commissioner said that the EU's 19th round of sanctions against Russia did not take new measures against oil imports.
The US dollar strengthened last Friday, continuing its rebound trend for most major currencies. The Fed cut interest rates but suggested a gradual easing policy will be adopted in the future, and traders are reevaluating the short-term outlook.
The dollar index, which measures the dollar's dollar's index, rose 0.3% to 97.662 against the six major currencies. The index fell 1% on Monday and Tuesday as markets expected the Fed could initiate a rapid rate cut, but the weekly line was flat. The Fed cut interest rates as expected, but did not show the urgency to quickly reduce borrowing costs in the xn--xm-6d1dw86k.coming months. Its interest rate forecast chart (i.e., the "dash map") shows that there may be two more interest rate cuts this year.
BannockburnForex chief market strategist Marc Chandler said: "This is really a 'dividing in two' trading week. The voting results and dot charts are not as dovish as statements and concerns about the labor market." The US dollar was previously under pressure due to market expectations and there may be room for further rebound in the future.
Chandler added: "We told our customers that it was just a bounce back. If you have to sell the dollar, it will be better soonPrice. ”
The pound fell last Friday as the scale of UK borrowing far exceeds official forecasts, further exacerbating uncertainty in fiscal outlook; meanwhile, the Bank of Japan kept interest rates unchanged, but the xn--xm-6d1dw86k.committee objected, and the yen strengthened.
The pound was one of the worst performers in the G10 currencies, reflecting investors' concerns about whether British Finance Minister Reeves could control the budget. The pound fell 0.6% to $1.3468, the biggest two-day drop since early April.
The two Bank of Japan reviewers unexpectedly opposed the decision to keep interest rates unchanged, surprised investors and turned their focus back to the next rate hike. After experiencing a volatile trading, the yen was almost flat against the dollar at 147.975.
Asian Market
Japanese Prime Minister Contender and Chief Cabinet Secretary Lin Fangzheng said on Monday that the weak yen, coupled with the Ukrainian war, led to cost-driven inflation.
RBA President Michele Bullock spoke in the Australian Parliament on Monday, saying that labour market conditions have eased slightly, unemployment has risen, and the labor market remains tight.
European Market
UK retail sales in August rose 0.5% month-on-month, slightly higher than expected 0.4%, the third consecutive month of growth. Still, trading volumes remained below the peak in March 2025, highlighting that the rebound was stable but incomplete
The broader three-month trend still points to weakness, with sales down -0.1% xn--xm-6d1dw86k.compared to the three months ending May. However, this marks an improvement in the -0.6% drop in July, indicating that the intensity of the decline in spending is weakening.
U.S. market
Canada retail sales fell -0.8% month-on-month to CAD 69.6B in July, down from the expected -0.6% decline. Core sales, excluding motor vehicles, parts and fuels, fell more, down -1.2%.
The decline is broad, with eight of nine sub-industries showing a decline, with food and beverage retailers leading the decline. Data shows that households are still subject to high borrowing costs and lingering prices squeezing pressure, consumer demand is cooling.
Nevertheless, Statistics Canada estimates suggest a brighter future prospect, with retail sales expected to rebound by 1.0% month-on-month in August.
Minneapolis Fed Chairman Neil Kashkali said the balance of risks faced by the U.S. economy is tilting towards the labor market rather than inflation. In one article, he believes that given the “simultaneous changes” of trade, immigration and tax policies, as well as mixed signals in the economy, the more pressing danger is “rapid further weakness” in employment rather than a serious overshoot of inflation.
Kashkali noted that the labor market could deteriorate “rapid and nonlinearly”, so preemptive action is necessary.In contrast, he said tariff-related uncertainty means the risk of inflation continuing to approach 3%, rather than a sharp surge to 4-5%.
This background prompted him to support this week's rate cut, raising his own forecast from the Fed's economic forecast twice to three times this year.
Nevertheless, Kashkali stressed that policy is not on the preset route. If the labor market proves to be more elastic or inflation rises unexpectedly, the Fed should pause interest rate hikes and even consider hikes again. Conversely, if job weakness is faster than expected, he said policymakers should be prepared to take more aggressive actions to support growth.
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