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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Avatradescn Official Website]: The US dollar index fluctuates above the 100 mark, and the market is waiting for US GDP data." Hope it will be helpful to you! The original content is as follows:
On Thursday, the US dollar index fluctuated around 100.30, and the US dollar rose 0.3% on Wednesday, a second consecutive day of gains as the market is optimistic that the trade agreement will improve the outlook for the U.S. economy. The U.S. dollar responded to the Federal Reserve's May 6-7 meeting minutes released on Wednesday, but gold prices were suppressed. Gold prices briefly fell below the 3280 mark at the end of Wednesday. The U.S. GDP data will be released on Thursday, the Personal Consumer Expenditure (PCE) price index data will be released on Friday, and www.avaforexcn.comments from Federal Reserve officials.
Analysis of major currencies
U.S. dollar: As of press time, the US dollar index fluctuated around 100.30, and the US data remained important for the rest of this trading week. U.S. GDP growth data for the first quarter is scheduled to be released on Thursday. Friday will end this trading week with April U.S. personal consumption expenditure price index (PCE) inflation data. The market hopes that key inflation indicators can continue to ease before the Trump administration’s tariff impact begins to penetrate the main data sets. Technically, the US dollar is currently testing the key resistance level of 100.5500. The Bollinger Band shows that the price is moving closer to the middle rail 99.9928, the upper rail is at 101.4373, and the lower rail is at 98.5482. If the resistance of 100.5500 can be effectively broken, the market is expected to further reach the Bollinger upper track position of 101.4373 in the future. The MACD indicator shows that the DIFF line (-0.3566) is crossing the DEA line (-0.3317), and the negative value of the MACD bar chart (-0.0496) narrows, indicating that the short momentum is weakening.
1. Big news! The US court stopped Trump's "Liberation Day" trade policy
A US federal court (US Court of International Trade) on Wednesday prevented US President Trump's "Liberation Day" tariffs from taking effect, ruling that Trump invoked the "International Emergency Economic Powers Act" to impose www.avaforexcn.comprehensive tariffs on the grounds of trade deficits, etc., which is an act of overreach. The Manhattan-based International Trade Court said the U.S. Constitution gives Congress exclusive authority to manage trade with other countries, and the president's international emergency powers to protect the U.S. economy cannot override it. thisThe lawsuit, filed by the nonpartisan Liberty Justice Center, representing five small U.S. businesses that import goods from tariff target countries, is the first major legal challenge to Trump's tariffs. These www.avaforexcn.companies all said the tariffs would damage their business capabilities. The lawsuit is one of seven court challenges to Trump’s tariff policy, along with challenges from 13 U.S. states and other small business groups.
2. The Central Bank of Mexico significantly lowered its economic growth forecast for 2025
On May 28 local time, the quarterly report released by the Central Bank of Mexico showed that the bank significantly lowered its economic growth forecast for this and next year, due to the weak domestic economy and the uncertainty brought about by U.S. trade policy. The central bank expects Mexico's GDP to grow only 0.1% this year, well below the February forecast of 0.6%. It also cut its GDP growth forecast in 2026 by half, downgrading to 0.9% from the previous estimate of 1.8%. The Central Bank of Mexico report pointed out that domestic economic activity is expected to continue to be weak, and changes in U.S. trade policy also poses major challenges to the global economy.
3. The Federal Reserve warns: The loss of US assets' status as a "safe haven" will hit the US economy for a long time
Feder officials warn that the global trade war launched by US President Trump has caused the US to lose its risk-haven position, which may have a "long-term" impact on the US economy. The latest Fed minutes show some interest rate makers have noticed the decline in U.S. Treasury bonds, stocks and the dollar prices in the weeks after Trump announced a full imposition of tariffs on trading partners. "These participants pointed out that this continued shift in correlation, or the weakening of U.S. assets as a safe haven, could have long-term effects on the economy," the minutes said. The FOMC meeting in early May was the first meeting after Trump announced the turmoil after the "Liberation Day" announced the increase in tariffs on April 2. Historically, global investors have always flocked to (rather than staying away from) U.S. assets during periods of market volatility.
4. "Federal Mouth Bottle": Fed's stagflation forecast may become the tone of the summary of the June economic forecast
"Federal Mouth Bottle" Nick Timiraos pointed out that it is important that Fed staff proposed a clear stagflation forecast at their meeting in May, because it may become the basic framework for the "Economic Forecast Summary" (SEP) submitted by officials next month. As always, the Fed’s description is quite calm, but Fed staff clearly point out a substantial slowdown in the labor market, which will lead to an increase in unemployment this year and keep unemployment highs over the forecast period (by 2027). Fed staff also predicted that inflation will rise "significantly" this year and that price increases will be "small" in 2026. It is worth noting that staff said that if they have a wrong forecast for 2026 and 2027 (which is expected to reach 2%), it is more likely to be underestimating rather than overestimating inflation risks.
5. US Trade Advisor: The Bond Market Misunderstanding SpecialTrump's legislative policy is underestimated
Navarro, senior adviser to the U.S. trade and manufacturing industry, pointed out in a www.avaforexcn.commentary for the Capitol Hill on Wednesday that the recent rise in bond market yields reflects fear, not facts. Navarro www.avaforexcn.commented: "Bond traders are pricing for a future where the government borrows trillions of dollars without the corresponding income offset. They believe that tax cuts have no corresponding source of funds. On the contrary, Trump economics and Trump tariffs will make the U.S. fiscal base more solid than any policy proposal in decades." He explained that at first glance, financial markets "seems" to make sense, but in-depth exploration reveals that they lack a www.avaforexcn.comprehensive understanding of the historical inaccuracy of the Congressional Budget Office's (CBO) forecasts and the huge positive impact of Trump's new tariffs on fiscal revenue.
Institutional View
1. Institutions: The European Central Bank is expected to cut interest rates by 25 basis points next week
Bastian Freitag, an analyst at Rothschild Wealth Management, pointed out that the European Central Bank is expected to cut interest rates by 25 basis points next week, reducing the deposit rate to 2.00%. The German fixed income chief said slowing inflation, stable inflation expectations and weakening momentum for wage growth all support the ECB's interest rate cut in June. The wealth management agency's basic expectation is that it may suspend actions after the rate cut in June, but the possibility of further rate cuts to 1.75% cannot be ruled out.
2. Mitsubishi UF: The yen may strengthen in the short term
Mitsubishi UF Bank analyst Derek Halpenney pointed out in a report that as the ultra-long-term Japanese government bond yields rise, the Bank of Japan may not turn to rate cuts, and the yen may strengthen in the short term. At the current node, we doubt whether the Bank of Japan is approaching any shift in policy stance, and international factors will continue to drive the yen to appreciate in the near future. On Tuesday, reports were reported that Japan may adjust its bond issuance plan, and the ultra-long-term Japanese government bond yields fell sharply. However, the results of the 40-year Japanese Treasury auction on Wednesday were disappointing, resulting in another rise in yields.
3. Deutsche Bank: The options market continues to bet on the weaker US dollar
www.avaforexcn.commerzbank analyst Thu Lan Nguyen pointed out in a report that the options market continues to bet on the weaker US dollar due to the still high uncertainty of US tariffs. From a market perspective, although tensions in the U.S. trade conflict have significantly eased, the risk of a US dollar plunge has not been significantly reduced. The euro-dollar three-month risk reversal indicator has only slightly declined from its recent highs. This means that the indicator still tends to bet on call options with rising exchange rates. Nguyen said this situation seemed reasonable. She said that even if the Trump administration has abandoned the extremely high punitive tariffs on countries, it cannot be consideredTrade relations will return to their former state.
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