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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Decision Analysis]: Expectations of interest rate cuts have heated up, and the US dollar has fallen out of favor." Hope it will be helpful to you! The original content is as follows:
In the early trading of the Asian market, the financial market experienced sharp fluctuations. On the news side, Israel launched a preemptive strike against Iran. As the geopolitical situation in the Middle East heated up sharply, spot gold soared, crude oil futures rose rapidly, and the short-term decline of the three major U.S. stock index futures expanded to 1%.
According to the latest report on the US AXIOS website, two people familiar with the matter revealed that the Israeli Air Force launched an attack on Iran on Thursday local time. Israel’s target is not yet known, but there is reported explosion in Tehran.
The report pointed out that Israel is directly attacking its largest and most well-equipped opponent, and has not received explicit support from the United States.
U.S. President Trump publicly opposed Israel's attack on Iran's nuclear facilities on Thursday, saying he still believes that a nuclear deal is possible.
It is unclear whether Israel ordered a crackdown on Iran's nuclear program or whether the United States opposes the specific action.
According to the AXIOS website, an alarm sounded across Israel on Thursday night local time. Israeli Defense Minister Katz declared a national emergency.
Katz said that after Israel launched an attack on Iran, missile and drone attacks against Israel and its civilians are expected in the near future.
Bloomberg, the US also quoted AXIOS reports that Israel launched air strikes on Iran, resulting in a serious escalation of the deadlock surrounding Iran's nuclear program, which may trigger a new round of war in the Middle East.
Asian market
New Zealand's manufacturing industry declined sharply in May, and the New Zealand www.avaforexcn.commercial manufacturing performance index plummeted from 53.3 to 47.5. The reading not only marks an expansion with Aprila decisive reversal and well below the historical average of 52.5.
The key www.avaforexcn.components of the index showed widespread weakness: production fell from 53.0 to 48.7, employment fell from 54.6 to 45.7, and new orders dropped sharply from 50.8 to 45.3 – all of which indicate deteriorating activity across the industry.
The business confidence index also reflects this sharp decline, with 64.5% of respondents giving negative www.avaforexcn.comments, up from 58% in April. The review reflects growing pessimism as manufacturers struggle to cope with lower demand, weak forward orders and sluggish consumer spending. Rising input costs, ongoing economic uncertainty and stagnant investment plans are intensifying pressure.
BNZ senior economist Doug Steel said, “The New Zealand economy can move steadily over the 2025 period, but PMI is another indicator that the risk of a possible stagnation of GDP rebound reported in the fourth quarter of 2024 and the first quarter of 2025 is increased.”
European Markets
Isabel Schnabel, a member of the Executive www.avaforexcn.committee of the European Central Bank, today hinted that the central bank's monetary easing cycle is "about to end", citing stable medium-term inflation forecasts and improvements in macroeconomic conditions.
Schnabel said with confidence that he downplayed the expected decline in inflation (expected to be only 1.6% in 2026), believing that this is a "temporary deviation" caused by the energy base effect and the strengthening of the euro.
Schnabel painted a relatively constructive economic picture of the eurozone, saying that growth remains "roughly stable" even as global trade tensions intensify. Private consumption continues to provide key support, while both manufacturing and construction are showing signs of recovery. She also stressed that “extra defense and infrastructure spending offset the impact of tariffs on growth.”
In her opinion, these structural shifts, www.avaforexcn.combined with the resilient euro and outperforming stocks, reflect the “new European growth narrative” that could boost the region’s economic status.
Nevertheless, Schnabel acknowledges the risks posed by escalating trade tensions, especially inflation volatility and financial market uncertainty. She warned that tariffs could be amplified through global value chains, posing an upward risk to inflation. At the same time, weaponization of raw materials may further intensify supply chain pressure.
The www.avaforexcn.comments made by two ECB members today reinforced the cautionary stance, as the easing cycle seemed to have been paused naturally after eight consecutive rate cuts.
French member Francois Villeroy de Galhhttps://www.avaforexcn.comau emphasized flexibility, he told Franceinfo Radio, future policies will depend on how inflation evolves and emphasize the preference for "pragmatism and agility".
Lithuanian member Gediminas?imkus also expressed a similar tone, saying that the policy has now reached a "neutral level." It is crucial for the ECB to remain free, “don’t www.avaforexcn.commit to one direction or the other.” He warned that uncertainty will grow as the 90-day tariff truce expires on July 9, especially around the upcoming U.S. trade decision.
U.S. market
As of the week ended June 7, the number of initial unemployment claims in the United States remained flat at 248k, slightly lower than the expected 251k. The four-week moving average of first-time unemployment benefits rose by 5k to 240k, the highest level since August 26, 2023.
The number of people who renewed unemployment claims rose by 54k to 1956k in the week ended May 31, the highest level since November 13, 2021. The four-week moving average of the number of people who continue to apply for unemployment benefits rose by 20k to 1915k, the highest level since November 27, 2021.
The US PPI rose 0.1% month-on-month in May, lower than expected 0.2%. The service industry PPI rose 0.1% month-on-month, while the www.avaforexcn.commodity PPI rose 0.2% month-on-month. Excluding food, energy and trade services, PPI rose by 0.1% month-on-month.
In the past 12 months, PPI has risen from 2.5% year-on-year to 2.6%, in line with expectations. Excluding food, energy and trade services, PPI rose 2.7% year-on-year.
The above content is all about "[Aihua Foreign Exchange Decision Analysis]: Expectations of interest rate cuts have heated up, and the US dollar has fallen out of favor". It was carefully www.avaforexcn.compiled and edited by Aihua Avatrade Foreign Exchange Editor. I hope it will be helpful to your trading! Thanks for the support!
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