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US CPI hits US dollar, RBA interest rate cut is imminent, UK GDP hits
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: US CPI hits the US dollar, RBA interest rate cut is imminent, and UK GDP is xmtraders.coming." Hope it will be helpful to you! The original content is as follows:
XM foreign exchange market prospect: US CPI hit the US dollar, RBA interest rate cut is imminent, UK GDP is xmtraders.coming
XM Preview: The importance of economic data to be released this week is from high to low: US July CPI and PPI data, RBA interest rate resolution, and UK second quarter GDP data. Next, we will interpret it one by one.
At 20:30 this Tuesday, the U.S. Department of Labor Statistics Bureau will announce the annual rate of core CPI in the United States in July, with the previous value of 2.9%, and the expected value of 3.0%. The U.S. did not adjust the annual rate of CPI in July, which was announced at the same time, with the previous value of 2.7%, and the expected value of 2.8%. Both the core CPI and nominal CPI annual rates are expected to grow by 0.1 percentage point, meaning market participants believe that the US economy will recover weakly in July. The Fed has been suspending interest rate cuts this year because Fed Chairman Powell always believes that Trump's tariff policy will lead to a surge in U.S. inflation. Trump holds the opposite attitude, saying the Fed should lower interest rates to around 1%, because high interest rates are hurting the potential for U.S. economic growth. The CPI data in July became a key indicator for judging who is right from Powell or Trump. If the CPI data continues to soar, Powell's judgment will be correct, otherwise, Trump's judgment will be correct. For the US dollar index, Powell's suspension of interest rate cuts is positive news, while Trump's plan to cut interest rates is a potential huge negative news. The U.S. Department of Labor Statistics will also announce the U.S. July PPI year at 20:30 this Thursday.Rate data, the previous value was 2.3%, and the expected value was 2.5%. PPI data is a forward-looking indicator of CPI data. When PPI data rises in July, it means that the probability of CPI data rising in August is relatively high.
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This Tuesday at 12:30, the RBA will announce the results of the August interest rate resolution. The mainstream expects it to cut interest rates by 25 basis points, and the benchmark interest rate may drop from 3.85% to 3.6%; at 13:30 on the same day, RBA Chairman Brock will hold a monetary policy press conference. Focus on its statements on monetary policy paths, trade policies, inflation and unemployment rate data. If the attitude is pessimistic, the Australian dollar will suffer a shock. From the perspective of economic data, Australia's unemployment rate in June was 4.3%, higher than the previous value of 4.1%, which showed signs of worsening in the driving market, but the absolute value is still below the 5% warning line. In the first quarter of this year, Australia's core CPI annual rate was 2.7%, lower than the previous value of 2.9%, down 10 consecutive periods, and the inflation situation was weak. Overall, Australia's historical economic data performed well, with a low unemployment rate, and the CPI data kept approaching the moderate inflation standard of 2%. However, monetary policy is often adjusted based on future expectations. The US tariff policy on Australia may cause serious impact on the export industry. Under the threat of potential risks, the RBA is likely to adopt a policy of interest rate cuts to boost the economy.
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This Thursday at 14:00, the UK Statistics Office will announce the annual GDP rate for the second quarter, with the previous value of 1.3%, and the expected value of 1.0%, with a large decline. The monthly GDP rate in the second quarter was announced at the same time, with the previous value of 0.5%, and the expected value of 0.1%, and the expected decline was also large. Judging from the expectations of GDP data, market participants are more pessimistic about the future development of the UK economy. According to historical data, as early as the first quarter of this year, the annual GDP growth rate of the UK has dropped from 1.5% to 1.3%. If it continues to decline in the second quarter, market participants may speculate that the UK's macroeconomic has entered a period of recession. Because the GDP data for three consecutive periods has declined, it can be judged as an economic recession from the economic data level. In terms of future development, the trade agreement between the UK and the US is not conducive to the development of the UK's automobile export industry, seriously weakening the UK's international status, and will continue to impact international funds' confidence in the UK's economic development. The GDP annual rate data may be difficult to rebound in the short term, which is negative for the British pound.
XM risk warning, disclaimer, special statement: The market is risky, so be cautious when investing. The above content only represents the analyst's personal views and does not constitute any operational suggestions. Please do not regard this report as the sole reference. At different times, analysts' views may change and updates will not be notified separately.
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