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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Platform]: Is the Fed's interest rate cut a "heart-boosting agent" in the market? The weak dollar may overturn Wall Street experience." Hope it will be helpful to you! The original content is as follows:
The risk rebound of the global index takes a breather a moment in the market's typical cautious attitude towards risks to key central bank events, and the Federal Reserve's (Fed) policy announcement is highly anticipated.
Soft US labor market and sticky inflation have increased bets on the Fed's aggressive policy easing this year. For the September decision announced later that day, the 25 basis points rate cut (bps) has been fully digested.
The continued dovish sentiment around the Federal Reserve put the dollar at more than two-month lows against six major currencies qphgm.cnpetitors. Earlier on Wednesday, the U.S. dollar index rose slightly as the Fed's position adjustments came close to 96.70.
On Tuesday, data released by the U.S. Census Bureau showed that retail sales rose 0.6% month-on-month to $732 billion in August, better than the market expected 0.2%.
During the same period, retail sales increased by 5% per year. The data failed to change the market's pricing on the Fed's verdict this Wednesday. According to Refinitiv's interest rate probability, the market continues to expect a 67.9 basis point cut by the end of this year.
Traders are now eagerly awaiting the Fed's interest rate decision, the summary of economic forecasts (SEP), the so-called dot chart and a press conference by Chairman Jerome Powell to obtain new hints about the scope and time of further rate cuts on the central bank.
After the release of the UK August Consumer Price Index (CPI) data, the pound/dollar is expected to continue its revised decline from its two-month high of 1.3672. As of this writing, the pair is at 1.3650Nearby is at a disadvantage.
The Office for National Statistics (ONS) showed that CPI rose 3.8% for the whole month last month, still at its highest level since January 2024. The market forecast is 3.9%.
The euro/dollar is struggling in the full rebound of the US dollar. The pair saw a new round of profit settlement in early European trading after hitting a four-year high of 1.1879 on Tuesday. ECB President Christine Lagarde plans to speak later in the session ahead of the Fed meeting.
The USD/Canada is trying to rebound tepidly to recover 1.3750, ending a two-day downtrend earlier on Wednesday. Traders take position adjustment measures ahead of policy decisions by the Bank of Canada (BoC) and the Federal Reserve. In the early trading of the U.S. on Tuesday, Statistics Canada released CPI data for August, showing that inflation rose to 1.9% year-on-year from 1.7% in July. Market expectations are 2%.
The US dollar/yen showed some fluctuations in the early Asian session, falling to 146.21, and then rebounded to 146.60, which is currently swaying at this point. The pair followed the dollar price trend while benefiting from the Japanese Yen (JPY) weakening again after exports fell for the fourth straight month, hurting yen buyers.
Gold has suspended its record-breaking rally to above $3,700 as traders hope to cash in on long positions in gold and prepare for the violent fluctuations in the Fed's showdown. In the early European session, gold fell slightly to around $3,665.
Euro: Euro/USD breaking through 1.1829 confirms the recovery of a larger uptrend. Intraday bias towards the 1.1916 prediction, followed by the 1.2 psychological level. On the downside, the secondary support level below 1.1779 will first turn neutral again.
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