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The US dollar index rises, the market is waiting for US PCE data
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Decision Analysis]: The US dollar index is rising, the market is waiting for US PCE data." Hope it will be helpful to you! The original content is as follows:
On Thursday, the US dollar index hovered below 100, and the US dollar strengthened against major currencies on Wednesday, after the Federal Reserve withstood the pressure from President Trump and kept the U.S. interest rates unchanged, which is in line with market expectations. After the Fed meeting, the dollar index rose sharply. The index rose 0.96% to 99.82 points, its highest level since May 29 and is expected to achieve its first monthly gain this year. Investors will pay attention to international trade situations and data such as the United States' June PCE, and will also release non-farm employment reports on Friday.
Analysis of major currencies
Dollar: As of press time, the U.S. dollar index hovers around 99.77, and the U.S. dollar gained a buy on Wednesday, after Fed Chairman Jerome Powell warned that the Fed was unlikely to lower interest rates unless the U.S. central bank obtained solid evidence that inflation will continue to ease rather than rise due to tariffs. Technically, the integer 100.00 constitutes the key resistance range above. If it can break through in large volume, it is expected to challenge 101.00 again; the lower support level is focused on 97.92 and the Bollinger band lower track 96.38. Once it falls below the latter, it will constitute a phased trend reversal signal.
1. Trump has imposed a 50% tariff on semi-finished copper starting from August. Refined copper has been exempted
U.S. President Trump imposed a 50% tariff on all semi-finished copper products entering the United States, but did not apply the tariff to imported refined copper. This move will save most relevant industries from potential costs. Trump issued an announcement on Wednesday to set a new round of tariffs on copper imports. However, the scope of this taxation is not as wide as many market participants expected. According to documents released by the White House, the new tariffs will take effect on August 1. Copper prices fell 18% at one point, and as of 2:11 pm New York time, it was $5.1310 per pound, partially recovering its decline.
2. Trump signs an executive order to impose 50% tariffs on Brazil
On July 30, local time, the White House said that US President Trump signed an executive order to impose 40% tariffs on Brazil, bringing the total tariff to 50%. Trump previously claimed that he would impose a 50% tariff on goods imported from Brazil starting August 1.
3. Trump says India will pay 25% tariffs threaten Indian-Russian energy transactionsAdditional punishment
U.S. President Donald Trump said he would impose a 25% tariff on India from August 1, and hinted that additional punishment would be imposed on India's procurement of energy from Russia. The Trump administration is scheduled to impose new tariffs on dozens of trading partners on August 1. The latest statement from the U.S. leader has broken India's hope of getting preferential treatment than other countries in the region. New Delhi was one of the first countries to hold talks with Washington after Indian Prime Minister Modi visited the White House in February. In response to Trump's latest statement, an Indian official who asked to be anonymous responded that New Delhi is still in contact with the United States to ensure a mutually beneficial trade deal. Earlier reports said Indian officials had said they would continue to negotiate with the United States in an effort to reach a bilateral trade deal by the fall.
4. Trump announced a trade agreement with South Korea: 15% tariff + $350 billion in investment
U.S. President Trump announced on social media platforms that the United States has agreed to reach a www.xmserving.comprehensive and www.xmserving.complete trade agreement with South Korea. The agreement is that South Korea will pay US$350 billion to the United States for investment projects owned and controlled by the United States, which will be personally selected by me as the president. In addition, South Korea will purchase $100 billion in liquefied natural gas (LNG) or other energy products, and South Korea has agreed to invest a large amount of money for its investment purposes. The amount will be announced in the next two weeks when South Korean President Lee Jae-ming visited the White House. The two sides also agreed that South Korea will fully open trade with the United States and accept American products including cars, trucks, agriculture, etc. We agree to impose a 15% tariff on South Korea. The United States will not be subject to tariffs.
5. The Canadian Prime Minister announced that he would be conditionally recognized by the Palestinian State in September
On July 30, Canadian Prime Minister Carney said that if the West Bank governing body meets certain conditions, Canada will announce its recognition of the Palestinian State at the United Nations General Assembly held in September this year. Carney said the Palestinian Authority must hold elections in 2026 and be www.xmserving.committed to other democratic reforms. Kahni spoke with Palestinian President Abbas earlier in the day and announced the decision. After the outbreak of this round of Pakistan-Israeli conflict in October 2023, Spain, Norway, Ireland, Slovenia and many non-European countries announced their recognition of the Palestinian state. In July this year, the United Kingdom and France successively announced that they would recognize the Palestinian State.
institutional views
1. CITIC Securities: It is expected that the Federal Reserve will cut interest rates again at the September interest rate meeting
CITIC Securities research report stated that the Federal Reserve's interest rate meeting in July 2025 maintains the policy interest rate unchanged, which is in line with market expectations. Powell's speech did not reveal too much prospects for interest rate adjustments in September. What is most worthy of attention at this press conference is that the Federal Reserve's judgment on tariff inflation has changed again. "Tariff inflation is one-time" is what Powell currently believes to be reasonable benchmark situation. The assumption that "tariff inflation is one-time" is superimposed by U.S. economic growth is weaker than last yearIn the case of “moderately restrictive” interest rate policies should reduce restrictiveness. Maintaining previous views, the Federal Reserve is expected to cut interest rates again at its September interest rate meeting.
2. Goldman Sachs: The Fed is expected to restart its easing cycle in the fall. Ashish Shah, chief investment officer of Goldman Sachs Asset Management Public Investment, said that as expected, Waller and Bowman, two Fed directors, have become dovish dissidents, while most members of the FOMC are more inclined to wait and see the trend of summer inflation. Data will be crucial in the next two months - if inflationary pressures caused by tariffs are proven to be temporary, we believe the Fed is expected to restart its easing cycle in the fall. 3. Institution: Mexico's tariff pressure resistance performance is still strong, but the economy may slow down in the second half of the year. Joan Domene, chief economist at Latin America at Oxford Economic Research Institute, said that Mexico's GDP growth rate, which was better than expected in the second half of this year, may slow down in the second half of this year, as the rebound trend of industrial output and services may be only a temporary phenomenon. He pointed out, "Trade data shows that Mexico's resistance to tariffs has been strong as of June, but if trade tensions escalate, it will further suppress domestic demand. The peak of tariff shock has not yet appeared." Despite this, the Oxford Economic Research Institute raised its growth forecast for Mexico in 2025 from 0.2% to 0.6%, but still maintains the "downward risk" assessment.
(Editor: Xiao Qi)
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