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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Decision Analysis]: The situation in Iran is unresolved, and risk aversion may heat up before the weekend." Hope it will be helpful to you! The original content is as follows:
Asian Market Review
On Thursday, data showed that both U.S. jobs and inflation had cooled down, thus supporting the Fed's interest rate cut twice this year. The US dollar index has fallen for the second consecutive day, and so far, the US dollar is priced at 98.23.
Israel-Iran conflict:
① Israel launches an operation code-named "The Power of the Lion" to strike Iran. Israel expects missiles and drones to attack Israel in the near future. Israel's Defense Minister Katz declares a national emergency and is ready to respond to major retaliation from Iran. ② Israel said it had www.avaforexcn.completed its first phase of operation, including strikes on dozens of Iran's military targets, including nuclear targets in different regions of Iran. But Israel said the action “could last for a long time.” ③According to BNO News: Israel launched a second air strike on Iran, and explosions came from many cities. ④ Israeli Prime Minister Netanyahu said that the Israeli air strikes targeted major Iranian nuclear scientists' research on nuclear bombs and Iran's main uranium enrichment facilities in Natanz area, and the Israeli army also hit the core of Iran's ballistic missile program. ⑤ The United States said it has not participated in the crackdown on Iran, and its current priority is to protect US forces in the region. Iran should not target U.S. interests or personnel.
Iranian response:
Iranian Supreme Leader Khamenei: Several www.avaforexcn.commanders and scientists were killed in Israel's attack.
Iranian Supreme Leader Khamenei: This attack will bring suffering to IsraelDestiny, in the end, will be punished as it deserves.
People inside the matter: Most countries in G7 plan to bypass Trump's cut of Russian oil prices. JPMorgan Chase maintains its 2025 oil price forecast, but warns that oil prices will double in the worst case.
Tariffs-①Trump will sign a key part of the U.S.-U.K. trade agreement in a few days. ②Canada Prime Minister: Progress has been made in the US-Canada trade negotiations. ③Trump: Auto tariffs may be raised in the near future. ④ The US Department of www.avaforexcn.commerce announced a new automobile tariff credit process and announced an additional tariff on steel appliances from the 23rd, with washing machines and refrigerators on the list.
The number of initial unemployment claims in the United States recorded 248,000 in the week from June 7, higher than the expected 240,000, the highest since the week from October 5, 2024. The US core PPI monthly rate in May was 0.1%, lower than expected 0.30%. Traders once again fully priced the Fed's interest rate cuts twice this year.
Trump called Powell a fool and called for a 200 basis point cut.
Source: The United States plans to invoke the Defense Production Act for Rare Earths.
Summary of institutional views
ANZ Bank looks forward to the Federal Reserve’s resolution: Economic growth expectations will be lowered, so we need to focus on Powell’s statement?
Interest rate decision: We expect the Federal Reserve to decide to remain silent at this meeting. Amid rising uncertainty over tariff increases and inflation changes, a strong labor market gives the Fed time to focus on the upcoming inflation report. But overall, we still think the Fed will resume rate cuts in the next quarter (probably the September meeting).
Economic Forecast: At this meeting, the Federal Reserve will also update its economic forecast. It is expected that in this economic forecast, FOMC will lower its expectations for GDP growth in 2025, while expectations of unemployment will remain unchanged. At the same time, inflation expectations for 2025 will also be raised. We think they will send a clear message: FOMC expects tariffs to drag down growth but not cause recession, and inflation will rise in the near term. The June SEP will show how FOMC members incorporated the April 2 tariff announcement into their economic assessments, and how recent developments and uncertainties may affect the Fed's dual mission. The updated forecast will also clarify whether the FOMC's baseline view that tariffs are temporary influencing on inflation remains true.
Press Conference: We expect Chairman Powell to continue to emphasize patience, pointing out that monetary policy is currently in a favorable position to respond appropriately to developments. Given that the CPI report in May was moderate and continued the previous cooling trend, the key focus will be whether Powell will provide time guidance on "staying patient" and whether FOMC believes there is room for interest rate cuts in the third quarter.
Analysis from NATIXIS: The Federal Reserve may lower the threshold required for interest rate cuts in the future?
The US May CPI data should make investors feel at ease, and this set of CPI data that is far below expectations makes policyThe makers were confused. Data for May so far are the biggest test of the speed and amplitude of tariffs affecting consumer prices, while the prices of core www.avaforexcn.commodities generally have little reflected the price impact of tariffs. We believe that the lack of tariff effects may reasonably reflect the forward move in stocks and the attempts of www.avaforexcn.companies to delay price increases as much as possible while waiting for the dust of trade policies to settle. Although trade speech has cooled since Liberation Day, the tariff levels have actually increased significantly www.avaforexcn.compared to before, so some people are bearing the resulting increase in costs. This means that the profit margins of domestic www.avaforexcn.companies may be squeezed. Still, inventory accumulation has slowed down and retailers will eventually need to restock at higher prices. We expect inflation effects to intensify in the www.avaforexcn.coming months as higher tariff environments continue. However, if future cost transfers are curbed, this could lower the threshold for the Fed's weakness in the level of labor market required to resume the rate cut cycle.
Wells Fargo: Raising U.S. growth forecasts, but it will still end with its weakest performance since the recession.
Recently released U.S. economic data shows that domestic consumer spending enthusiasm remains unchanged, www.avaforexcn.companies are still recruiting, and economic activities are still expanding. However, uncertainty in the macro environment continues to cast a shadow on economic growth. Based on the upward revision of previous economic growth data in the United States and a sharp reversal of imports after the first quarter, we will raise our forecasts for U.S. economic growth in the second quarter. But in terms of potential slowdowns in tariffs, it is too early to predict a reversal.
Our increase in the forecast for U.S. economic growth is mainly due to corrections in household income data and a weakening of import growth path. A stronger income trend will provide more buffers for consumption in the short term, while a sharp reversal of imports in April will boost GDP growth in the second quarter and suggest a weaker import path this year. But even as we raise this expectation https://www.avaforexcn.com, we still expect this year to be the slowest annual growth rate outside the recession since at least the early 1990s.
Overall indicators are full of trade distortions. Today, the actual final sales to domestic private buyers are more reflective of the reality than GDP. The indicator puts aside the growth in inventory, net exports and government spending to assess potential domestic demand (i.e. consumer spending and corporate fixed investment). Based on this measurement, even if we consider our upward correction, we still expect domestic demand to shrink in the second half of this year.
Price data are just beginning to reflect tariff-related costs, and the extent of sustained price growth remains an open question. Recruitment has also remained stable, indicating that the timing and intensity of the Fed's easing policy may be delayed and reduced. If the labor market declines in the next month or so, we may stillSeeing the Fed cut interest rates in September, we have already reduced the cumulative easing this year from the previous 100 basis points to 75 basis points.
Although U.S. economic growth performed quite well in the first half of the year, the increased uncertainty about the future direction of tariffs and fiscal policies is causing www.avaforexcn.companies and consumers to hesitate. We still expect growth to slow under this weight of unpredictability.
Nomura Securities' forward-looking Bank of Japan's June meeting: It has become a consensus that the unexpected event that may occur in the press conference is...
In the Bank of Japan's June interest rate resolution announced next Tuesday, we have two major expectations for this: one is that the Bank of Japan will decide to keep interest rates unchanged; the other is that starting from April 2026, the pace of debt reduction will be slowed down.
Policy interest rate: As mentioned earlier, the Bank of Japan will most likely not choose to raise interest rates at this meeting. We also note that reducing Japan's Treasury bond purchases has different policy goals and policy interest rate adjustments, and we believe it is important to consider these two separately.
Press Conference: Given the current situation of tariff negotiations in various countries and the lack of sufficient economic data on the impact of tariffs, we believe that Bank of Japan Governor Kazuo Ueda is unlikely to make any particularly new remarks on the economy and prices at the press conference unless an unexpected agreement was reached at the US-Japan summit scheduled for June 15-17.
Shrinking Japanese Treasury bond purchases: The Bank of Japan is clearly considering slowing down its Japanese Treasury bond purchases from April 2026. We believe that the Bank of Japan is unwilling to integrate the maturity range in its operations to cover the super-long period zone because its basic policy is to leave interest rate formation to the market.
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