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Global investors have become picky and debt risk premiums in developed countries have been revalued! TACO transaction affects the US dollar and becomes the focus of the weak market
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Hello everyone, today XM Forex will bring you "[XM Group]: Global investors have become picky, debt risk premiums in developed countries are revalued! TACO transactions affect the US dollar and become the focus of the weak market." Hope this helps you! The original content is as follows:
Asian market conditions
On Monday, the U.S. dollar index rose back above the 99 mark. As of now, the U.S. dollar is quoted at 99.12.
Paulson, the new head of the Philadelphia Fed, who rarely has any opinions, hinted that he supports two more interest rate cuts this year, each by 25 basis points.
The leaders of the four mediating parties, Egypt, the United States, Qatar and Türkiye, signed the "Comprehensive Document on the Gaza Ceasefire Agreement."
OpenAI joins hands with Broadcom to build self-developed AI chips, which will be deployed in the second half of 2026.
JPMorgan Chase launches $1.5 trillion plan to invest in U.S. defense and key industries.
Summary of institutional views
Morgan Stanley looks forward to U.S. CPI in September: The transmission effect of tariffs continues to show, and the overall CPI may be slightly higher...
The overall CPI annual rate: 3. 10%; overall CPI monthly rate: 0.41%; core CPI annual rate: 3.12%; core CPI monthly rate: 0.32%
The U.S. September CPI, originally scheduled to be announced on Wednesday, has been postponed to October 24. We believe that core CPI will record a monthly rate of 0.32% and an annual rate of 3.12%, and core www.xmmen.commodity inflation will remain in a positive range, reflecting the gradual transmission effect of tariffs. Core services inflation decelerated slightly as rental and air ticket price growth slowed. Not too strongStrong energy inflation pushed headline inflation above core levels. The overall CPI monthly rate is expected to be 0.41%, the annual rate is 3.10%, and the index without seasonal adjustment is 325.076. So far this year, tariff-related transmission is estimated to have contributed about 30 basis points to the annual rate of core inflation; if the data is in line with expectations, this contribution will rise to 35 basis points, nearly half of the expected total tariff impact, assuming that tariff policy remains at current levels.
Morgan Stan: The quality of economic data is now divided under the shutdown, and the Federal Reserve will rely more on the undamaged employment report
The federal government shutdown has caused the delay in the release of the original September employment report, and is likely to also delay the September consumer price index (CPI) and retail sales data. More importantly, the shutdown has raised widespread concerns about the quality of data reported in October.
However, we do not expect that the data quality of the employment survey will be affected, while the data quality of the CPI survey may be impaired. Retail sales data are expected to remain relatively reliable. Given that the Federal Reserve (Fed) is currently more focused on addressing labor market risks than inflation risks, it can still rely on employment data to guide its October FOMC policy meeting decision.
In the jobs report, neither the establishment survey (which provides an estimate of nonfarm payrolls) nor the household survey (which provides the unemployment rate) were worsened by the shutdown. Although the current shutdown is approaching the critical payroll period covering the 12th of every month, the agencies participating in the survey will retain their employee information. Although the Bureau of Labor Statistics (BLS) will delay collection and aggregation, the underlying employment information is not www.xmmen.compromised. In fact, delay actually improves the quality of the data because later collections tend to be more www.xmmen.complete and improve survey response rates. Experience after the 2013 BLS shutdown showed "above-average agency survey response rates" for the delayed October jobs report.
Fanon Credit: The triggering of the "TACO transaction" is imminent, will the US dollar selling pressure be sustainable?
Last Friday, Trump’s performance on social platforms once again triggered market concerns about tightening trade policies. The U.S. dollar tumbled as a result, and despite the Trump administration's easing signals over the weekend, these threats may have heightened market concerns about the U.S. economic outlook - concerns that have continued to rise since the U.S. government shut down nearly two weeks ago. And it has had a negative impact on U.S. bond yields and U.S. stocks.
However, we do not believe that this round of selling of the U.S. dollar will continue for two reasons: First, we believe that foreign exchange investors may regard this trade dispute as a new round of "TACO transactions" and will re-buy U.S. assets and U.S. dollars in the near future; second, when foreign capital invests in the U.S. stock and bond markets recently, it is increasingly accompanied by hedging operations of shorting the U.S. dollar. Therefore, the recent stock market sell-off may force foreign investors to buy back some of these hedging positions, boosting the dollar.
The lack of important data releases today may keep traders focused on the American Leaguecomments from central bank officials and the evolution of trade tensions. The dollar is vulnerable to any signs of further escalation but could also benefit if tensions begin to ease. Additionally, as currency investors try to assess the impact of the U.S. government shutdown and resurgent trade tensions on Fed policy, they may choose to stay on hold ahead of Powell's speech tomorrow.
Analyst Fawad Razaqzada: France is likely to fall into a government shutdown. The ECB may still...
French President Macron reappointed Le Cornou as prime minister and tasked him with submitting a revised budget to parliament. But the proposal is widely expected to be rejected, likely triggering a vote of no confidence later this week. In fact, the National Alliance and the right-wing Republican Alliance have jointly submitted a motion of no confidence. The leaders of the two parties, Le Pen and Jyoti, confirmed that the motion has been formally submitted to the National Assembly. It can be seen that France is likely to fall into a government shutdown, which is by no means good for the euro. However, the EURUSD exchange rate remains above the 1.1500 mark, indicating that investors are not currently overly panicked by French political drama.
Although the European Central Bank's interest rate cutting cycle may have ended, if subsequent economic data weakens further, we may still see another interest rate cut at the next interest rate meeting. According to the minutes of the central bank’s September meeting released last week, the European Central Bank still believes that inflation risks are generally balanced but slightly downward. Several members raised the risk that inflation could fall below target, while only a few warned of the possibility of overshooting.
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