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Fed Milan supports a 50 basis point cut in a short period of time, gold falls into volatility
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: Federal Reserve Milan supports a continuous cut of 50 basis points in a short period of time, and gold is in fluctuation." Hope it will be helpful to you! The original content is as follows:
On September 26, during the Asian session on Friday, spot gold trading around $3,740.57/ounce, and gold prices narrowed their gains on Thursday, after the U.S. initial unemployment claims fell unexpectedly last week, and investors were waiting for key inflation data that could affect the Federal Reserve's next interest rate action; U.S. crude oil trading around $65.25/barrel, oil prices stabilized on Thursday after hitting a seven-week high on the previous trading day. Russia announced that it would restrict fuel exports to the end of the year, but the U.S. released strong economic data, weakening the market's optimism about further interest rate cuts, thus limiting oil price increases.
The U.S. Department of xn--xm-6d1dw86k.commerce reported that the U.S. gross domestic product (GDP) growth from April to June was revised to 3.8%, xn--xm-6d1dw86k.compared with the previous value of 3.3%. Economists surveyed by Reuters did not expect to correct their expectations.
Steve Englander, head of global G10 foreign exchange research and North American macro strategy at Standard Chartered, said: "People seem to have generally held short positions in the U.S. dollar, and at least from some signs, the size of these positions may exceed market expectations. We expect interest rates to be higher than market expectations in a year, as the latest data shows a significant disconnect between weak labor markets and stronger overall GDP and output data."
The U.S. dollar index rose 0.68%, hitting a two-week high of 98.50. The dollar has risen slightly since the Fed cut interest rates as expected last Monday. Although statements from policymakers, including Chairman Powell, suggest that rate cuts will largely depend on upcoming economic data, traders still expect rates to be cuts in the remaining two Fed meetings this year.
"In fact, beautyOne problem facing the Fed is how quickly you want to cut interest rates. Normally, when the labor market is so weak, you would say it's all because of demand," said Englander, if demand is sluggish, it's necessary to cut rates. In this case, they have to keep in mind the possibility of a positive supply shock, which means they should be cautious about the cuts.
On Thursday, more Fed officials continued to xn--xm-6d1dw86k.comment on last week's rate cut decision. Kansas City Fed President Schmid said interest rate cuts are needed to help ensure the job market stays in good shape. Chery Fed President Goulsby said he is not rushing to take a lot of relaxed policy actions when inflation is above target and goes wrong.
Milan, who just became a Fed, continues to urge a bigger underground
Asian market
Inflation in Tokyo was lower than expected in September, with the core CPI (excluding fresh food) remaining flat year-on-year, higher than expected 2.8%. This easing was mainly attributed to measures taken by the Metropolitan government, including cutting child care and water fees, which eased part of the burden on rising cost of living.
Core inflation excluding fresh food and energy slowed sharply from 3.0% to 2.5%, while the overall CPI also stabilized at 2.5% year-on-year. Inflation, excluding fresh food, fell from 7.4% to 6.9% year-on-year, highlighting the widening and slowing price pressure.
Warm data could give the Bank of Japan a There is some breathing room, although the market still expects another 25 basis points in the xn--xm-6d1dw86k.coming months. Opinions remain divided on whether policymakers should take action as early as October or postpone it to January.
European market
Soviet Central Bank chose to keep policy rates at 0.00% in September, the first time since the interest rate cut cycle began in December 2023. The move is in line with expectations and reflects the balance between weak inflation and weak growth background.
The central bank noted that inflation rose slightly, from -0.1% in May to 0.2% in August, driven mainly by rising prices in tourism and imported goods. Nevertheless, it stressed that inflation pressure bases have been It has remained unchanged, and the conditional forecast remains within the definition of price stability within the “whole forecast range”. Assuming interest rates remain at 0%, annual inflation is expected to be 0.2% in 2025, 0.5% in 2026 and 0.7% in 2027.
However, the Swiss National Bank warned that the outlook for economic outlook is deteriorating due to “substantial U.S. tariffs.” It said that these measures are expected to put pressure on exports and investments, with the machinery and watchmaking industries particularly affected. Therefore, the Swiss National Bank maintained its forecast of 1-1.5% GDP growth in 2025, but lowered its forecast for 2026 to just below 1%.
U.S. market
U.S. durable goods orders surged 2 month-on-month in August.9% to USD312.1B, far stronger than expected month-on-month contraction -0.5%. Excluding transportation, orders continued to grow by 0.4% month-on-month to USD 201.9B, a slight decrease of -0.1% month-on-month that exceeded expectations. Except for defense orders rose 1.9% month-on-month to USD290.7B.
The overall increase was driven by a 7.9% month-on-month increase in transportation equipment to USD 110.2B, but the wide increase indicated a strong potential demand.
As of the week ended September 19, the number of initial unemployment claims in the United States fell -14 to 218, far better than the expected 240. The four-week moving average of the number of first-time unemployment benefits fell -3k to 238k.
In the week ending September 13, the number of people who continued to apply for unemployment benefits fell -2 to 1,926. The four-week moving average of continued unemployment benefits fell by -4.5k to 1930.
Chicago Fed Chairman Ostan Goulsby said in his speech overnight that he felt "a little uneasy" about the excessive rate cuts ahead of schedule based solely on slowing employment growth. With inflation above 2% for nearly five consecutive years and on the "wrong path", he warned that simply assuming price pressure is temporary is a risky strategy.
In addition, San Francisco Fed Chairman Mary Daly reiterated that further easing may be needed, but emphasized the need for moderation. She believes that “slashing a little more over time” while reevaluating the upcoming data is a safer way to balance the Fed’s dual mission.
Daly warns that moving too quickly can disrupt employment or price stability. She said a step-by-step approach would allow the central bank to “really achieve good results” by avoiding excessive corrections.
Kansas City Fed Chairman Jeffrey Schmid said that given the signs that the labor market may be more sudden than expected, the Fed cut rate by 25 basis points last week was a "reasonable risk management strategy."
Schmid, however, admitted that inflation was still “too high” and that while the labor market cooled, it remained “basically balanced.” He believes that adjusting policies to a "slightly restrictive" level is the right place to support employment while still tending to fight inflation.
He declined to say where he believes the policy is heading and said he would remain “rely on data” when weighing any further moves.
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