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Failing to pass the eighth round of voting, Powell emphasized downside risks to employment
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Hello everyone, today XM Forex will bring you "[XM Foreign Exchange Market Analysis]: The eighth round of voting failed, Powell emphasized the downside risks to employment." Hope this helps you! The original content is as follows:
On October 15, spot gold was trading around US$4,173 per ounce. Gold prices once again hit a record high of US$4,179.47 per ounce on Tuesday, as market expectations that the Federal Reserve will cut interest rates this month and intensified trade tensions ignited investors' risk aversion.
Marc Chandler, chief market strategist at Bannockburn Capital Markets, said the market was caught off guard. People originally wanted to believe that trade tensions had eased. But obviously, no.
Joseph Trevisani, senior analyst at FX Street, said, "I think what's happening now is that the market doesn't believe this is going to be a long-term problem, especially given the history of the past year starting in April."
(Federal Reserve Chairman Powell said on Tuesday that the U.S. labor market remained stuck in a downturn of "low hiring, low layoffs" throughout September, although the economy may be on "a slightly more solid track than expected."
French Prime Minister Sebastien Lecornu proposed on Tuesday that the landmark 2023 pension reform be suspended until after the 2027 presidential election, requesting that this be Making concessions to left-wing MPs who have made it a condition of their political survival. After the news was announced, the euro expanded its gains against the dollar, rising 0.33% to $1.1606 in late trading in New York.
Asian Markets
China's consumer inflation remained in negative territory in September, highlighting continued weakness in domestic demand despite underlying price pressures showing initial signs of improvement. Overall CPI rose to -0.3% from -0.4% year-on-year, lower than expected-0.2% year-on-year.
The National Bureau of Statistics stated that falling food and energy prices were the main reasons for the price decline. Food prices fell by -4.4% year-on-year, and consumer goods prices fell by -0.8% year-on-year, partially offset by a 0.6% year-on-year increase in service prices.
However, the data also show signs of stability beneath the surface. Core CPI excluding food and energy rose 1.0% year-on-year, the highest level since February 2024, indicating that domestic price momentum in services and other non-food categories is slowly recovering.
At the same time, ex-factory prices continued to shrink, and PPI rose from -2.9% to -2.3% year-on-year, in line with expectations. This marked the 36th consecutive month of deflation among producers and highlighted ongoing cost pressures in the manufacturing sector. Dong Lijuan, a statistician at the National Bureau of Statistics, said recent capacity management efforts in multiple industries have helped narrow the pace of decline, noting that market www.xmmen.competition has improved as industrial supply and demand slowly rebalances.
Sarah Hunter, assistant governor of the Reserve Bank of Australia, said in a speech on Tuesday that recent data showed that the Australian economy was performing slightly stronger than expected, which reinforced the bank's decision to keep the cash rate unchanged at 3.60% at its September meeting. She noted that the RBA continues to see signs that "private demand is recovering", "inflation may persist in some areas" and labor market conditions remain "stable".
Hunt emphasized that as of the June quarter, GDP increased by 1.8% year-on-year. "If anything, the outcome was a bit stronger than expected in the August SMP," she said, citing resilient private spending and stable employment as evidence the economy remained stronger than previously expected.
She also noted that high-frequency indicators suggested that underlying inflation in the September quarter may be stronger than expected, suggesting that economic and labor market conditions remain "somewhat tighter than we assess." However, she acknowledged that job growth had slowed "slightly more than expected" and that "heightened" global uncertainty continued to cloud the outlook.
European Markets
BoE Governor Andrew Bailey said overnight that the latest UK labor market data released this week reinforced his view that inflationary pressures are continuing to gradually ease. "I've been saying this for a while, but I think we're seeing some softening in the labor market," Bailey said while speaking at an IIF event in Washington.
Bailey acknowledged that uncertainty over U.S. tariffs has prompted many www.xmmen.companies to postpone investment plans, causing another drag on business sentiment. At the same time, he said the central bank has not observed any direct impact on inflation.
His www.xmmen.comments came as International Monetary Fund chief economist Pierre-Olivier Gurinchas warned that the Bank of England must be "very cautious" about future interest rate cuts, given that UK inflation remains high www.xmmen.compared with peers. The latest forecasts from the International Monetary Fund predict that the UKConsumer prices will rise by 3.4% in 2025 and 2.5% in 2026, the highest rates in the G7.
BBoE Monetary Policy www.xmmen.committee member Alan Taylor, one of the most dovish voices on the www.xmmen.committee, warned that the UK economy faced "predominant downside risks" as growth slowed and labor market weakness widened.
In a speech today, he said that output is below potential, business and household confidence remains weak, and deflationary trends continue to deepen. Wage settlement rates are now expected to be around 3-3.5% by the end of the year and lower in 2026 - suggesting, he believes, "wage-led domestic inflation will not reignite the upward spiral".
Taylor also pointed to global trade dynamics as a growing deflationary force. He noted that UK import prices, particularly from Europe, have been falling for several years and are likely to fall further as "trade diversion" accelerates - the process by which supply chains move across regions, increasing www.xmmen.competition and lowering goods prices.
Taylor acknowledged that the inflation hump and benign expectations for 2025 pose some upside risks, but said these risks should recede in early 2026 as early tax and managed price effects fade. With inflation fundamentals weakening and external price pressures receding, he insisted that the balance of risks justified a lower path for bank rates, consistent with his repeated dissent at recent Monetary Policy www.xmmen.committee meetings.
Germany's ZEW economic sentiment index rose slightly to 39.3 in October, higher than 37.3, but lower than the expected 41.7. The current situation index further deteriorated from -76.4 to -80.0, lower than the expected -75.0.
ZEW Chairman Achim Wambach noted that experts "still hope for a mid-term improvement", but ongoing global uncertainty and doubts about Berlin's national investment plans continue to weigh on confidence.
From an industry perspective, expectations for some export-oriented industries have improved after a recent decline in shipments to China. However, the automotive industry, which has long been the backbone of German industry, remains an exception, with "a slight deterioration in indicators."
Across the euro zone, confidence has fallen sharply. The ZEW Economic Sentiment Index fell to 26.1 from 22.7, below expectations of 30.2. The current situation index plummeted -30 points to -31.8. ZEW attributed the decline mainly to France's political instability and ongoing budget disputes.
U.S. Markets
Federal Reserve Chairman Jerome Powell reinforced expectations for another interest rate cut later this month. Speaking overnight, he said despite the shutdown, "not much has changed" in the outlook for growth, jobs and inflation based on available information.
Powell noted that hiring momentum has weakened and wage growth has "slowed sharply" over the past few months. He attributes this partly to structural factors such as immigration and declining participation rates, whichThese factors limit the growth of the labor force. While layoffs remain subdued, Powell warned that "downside risks to employment appear to have risen," citing survey evidence that households are seeing fewer job openings and businesses are reporting less difficulty hiring.
On inflation, Powell noted that price pressures remain under control. The latest surveys and data suggest rising www.xmmen.commodity prices "largely reflect tariffs rather than broader inflationary pressures." Although short-term inflation expectations are slightly higher this year, long-term expectations remain tightly focused on the Fed's 2% target.
To sum up, Powell’s tone is balanced but leaning toward dovishness. Federal funds futures continued to see changes of more than 90%, and were further reduced by 25 basis points to 3.75-4.00% on October 29.
The above content is all about "[XM Foreign Exchange Market Analysis]: The eighth round of voting failed, Powell emphasized the downside risk of employment". It was carefully www.xmmen.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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