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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Ava Foreign Exchange Market Analysis]: Five major events that will happen in the global market this week". Hope it will be helpful to you! The original content is as follows:
Another strong non-farm employment report (NFP) in April, but trade doubts remain widespread. Now, the focus is temporarily shifting to the Federal Reserve, but the trade deal may be the focus.
1. Trade negotiations and agreements have attracted much attention
"They really want to reach an agreement" - U.S. President Donald Trump said about China, but he also added that his conference call with Chinese President Xi Jinping has no plans this week. This has little incentive for markets that want to see a severe tariff reduction of up to 145%.
Washington is actively negotiating with more than 10 countries in an expectation to reach an agreement with India, which mainly exports services rather than goods. Japan is on the list, but Tokyo officials poured cold water on this enthusiasm.
The first agreement is crucial as it will provide a blueprint for the rest of the world. Will the 10% tariff on the benchmark be reduced? This is exactly what investors want to see. However, as each day passes, the damage to trade is real.
The S&P 500 has risen for nine consecutive days—the best performance since 2004—it seems only a trade deal can drive stocks up.
2. ISM service industry PMI may show peace between enterprises
On Monday, 22:00 Beijing time. This forward-looking survey is often seen as a leading indicator of non-farm employment reports, but this time, it exists independently. The U.S. economy is centered on services and consumption, so another decline will affect the market.
After the March score was 50.8 points, the possibility of sliding towards the 50-point threshold is increasing, which separates expansion and contraction. Below this level willWorrying and may hurt market sentiment.
However, soft survey data have been weak and sometimes even bad, while hard data, such as non-farm employment reports, remain strong. Can the ISM Service Industry Purchasing Managers Index (PMI) exceed expectations? Positive accidents cannot be ruled out after President Trump postponed reciprocal tariffs and exempted certain goods tariffs.
3. The Federal Reserve will rely on employment data to maintain calmness
On Thursday, Beijing time, a decision was made at 02:00 Beijing time and a press conference was held at 02:30. "Totally stiff" - Trump called Fed Chairman Jerome Powell in an interview, adding that the world's most powerful central bank governor "just dislike me." While the www.avaforexcn.commander clarified that it was possible to fire Powell, the frustration of high interest rates seemed to keep rising in the White House.
Nevertheless, the market generally expects the Fed to keep interest rates unchanged again.
Consumer surveys support rate cuts, but do not necessarily reflect people’s actual behavior, but only reflect their words. Economic data have always been optimistic. The labor market continues to grow steadily, as shown in the non-farm employment report.
Employment is a task for the Fed, and the other is inflation, which is still low but has not yet launched a final shock to the central bank's 2% target, meaning that inflation may rise if left uncontrolled.
In addition, the "abnormal uncertainty" in the future also needs to wait and then take action.
What will Powell say about the next decision? In addition to sticking to the slogan of “data dependence,” any signs of interest rate cuts will drive stocks and gold up, while putting pressure on the US dollar (USD). Voices who are skeptical of such actions will have the opposite effect.
I expect Powell to avoid any promises, disappointing those who are expecting a rate cut. At the time of writing, the bond market shows a 35% chance of a rate cut in June.
4. The Bank of England is preparing to resume interest rate cuts
On Thursday, at 19:00 Beijing time, the press conference was held at 19:30. This is "Super Thursday", which means the Bank of England (BoE) will release its quarterly monetary policy report as well as interest rate decisions. Another thing that is expected to be different is that officials are preparing to reduce borrowing costs after the suspension in March.
UK inflation has been falling and finding meaningful growth has become difficult. While only one member last time supported the rate cut, the hints of Bank of England Governor Andrew Bailey and his colleagues pointed to the rate cut.
This central bank, known as the "Old Lady", is preparing to lower its inflation and growth forecasts. However, this does not mean that there will be a promise of further interest rate cuts. I expect www.avaforexcn.comBelley will emphasize this is a time of extreme uncertainty, echoing the views of other central bank colleagues.
In addition, the Central EnglandThe decision to do so is a day after the Fed, and if Powell is cautious, Bailey may echo his tone.
5) U.S. unemployment benefits applications may decline
Thursday, 20:30 Beijing time. If Trump’s policies affect the labor market, unemployment benefits applications may show first. However, the indicators for this week have been stable over the past few months, hovering around 220K.
The rise of 241K last week was an exception, but this was due to changes in holiday time for New York schools. The particularity of this data means that the current expectation is to decline to the previous level.
However, traders should be aware of the potential real surge in applications, which will indicate the impact of layoffs from the Department of Government Efficiency (DOGE) and tariffs. So far, this has not happened - but such a move cannot be ruled out.
Trump once again increased his words to Powell—and there is room for further escalation. The White House headlines will continue to cause waves and appear at unexpected moments. Please trade safely.
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