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Hello everyone, today Avatrade Aihua Foreign Exchange will bring you "[Aihua Foreign Exchange Decision Analysis]: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
In the www.avaforexcn.complex chess game in the foreign exchange market, various news is like the settlement of chess pieces, always controlling the exchange rate trend and investors' decisions. On July 8, many important news came one after another. The following is a review of the positive and negative news that affects the foreign exchange market.
1. Good news
(I) The scale of my country's foreign exchange reserves has rebounded significantly
Data released by the State Administration of Foreign Exchange on July 7 showed that as of the end of June 2025, my country's foreign exchange reserves were US$3317.4 billion, up 32.2 billion from the end of May, an increase of 0.98%. It has once again stood above US$3.3 trillion since the end of September 2024, and has remained above US$3.2 trillion for 19 consecutive months. The State Administration of Foreign Exchange pointed out that in June, affected by the macro policies of major economies and economic growth prospects, the US dollar index fell, and global financial asset prices generally rose. Under the www.avaforexcn.combined effect of factors such as exchange rate conversion and asset price changes, the scale of foreign exchange reserves increased that month. The stable growth of my country's foreign exchange reserves demonstrates the resilience and risk resistance of the economy, enhances international investors' confidence in RMB assets, and plays a potential support for the RMB exchange rate. It will help stabilize the performance of the RMB in the foreign exchange market, attract more foreign capital to flow into China's related assets, promote the use of the RMB in cross-border trade and investment, and be beneficial to RMB foreign exchange transactions.
(II) The central bank has continuously increased its holdings of gold
At the end of June, my country's gold reserves were 73.9 million ounces, an increase of 70,000 ounces from the end of last month. The central bank has increased its holdings of gold for eight consecutive months. Against the backdrop of weakening momentum of global economic growth and geopolitical instability, gold is highly favored as a safe-haven asset and a carrier of stable value. The central bank's continuous purchase of funds has not only optimized my country's international reserve structure, but also improved theThe stability and security of foreign exchange reserves have also enhanced the credit support of the RMB to a certain extent. From the perspective of market expectations, my country's positive layout signal for macroeconomic stability has been conveyed to the outside world, and it has enhanced the attractiveness of RMB assets in the foreign exchange market, which is conducive to the steady operation of the RMB exchange rate, especially in dealing with the impact of fluctuations in the external financial market, providing a stronger resilience guarantee for the RMB.
(III) Foreign capital increased its holdings of domestic stocks with enthusiasm
According to data from the State Administration of Foreign Exchange, the net inflow of cross-border funds of non-bank sectors such as enterprises and individuals in May was US$33 billion, of which the increase in holdings of domestic stocks with foreign capital increased further www.avaforexcn.compared with the previous month. Many foreign institutions such as Morgan Stanley, Nomura Oriental International Securities, and Goldman Sachs have expressed their optimism towards the Chinese market. Morgan Stanley said global investors' willingness to allocate Chinese stocks, Nomura Oriental International Securities believes that China's equity assets are expected to outperform overseas markets in the second half of the year, and Goldman Sachs is optimistic about the trend of RMB-denominated assets and foreign capital inflows. The continuous inflow of foreign capital has increased the demand for the RMB, promoted the supply and demand relationship of the RMB in the foreign exchange market in a favorable direction, provided upward support for the RMB exchange rate, and also enhanced the status and influence of RMB assets in the international financial market.
2. Bad news
(I) Goldman Sachs warns that the US dollar may face a sharp drop
Recently, Goldman Sachs issued a strong warning that the US dollar may start a new round of sharp drop. Looking back at the first half of 2025, the US dollar index has fallen by 10.8%, the worst performance in the same period since 1973. Goldman Sachs believes that if the upcoming U.S. employment data shows that the job market has deteriorated significantly, it will strengthen the market's expectations of the Federal Reserve's dovish policy and become a key trigger point to drive the downward trend of the US dollar index. In addition, the mitigation of international geopolitical risks and the elimination of "noise" related to US domestic fiscal policy and tariff issues are all weakening the role of the US dollar as a "safe-haven currency". Even if the non-farm data does not meet the expected bad level, the US dollar index may decline under the influence of multiple factors. As the world's major reserve currency, the decline of the US dollar is expected to trigger a chain reaction in the foreign exchange market. The exchange rate fluctuations of other currencies relative to the US dollar are intensified. The asset prices denominated in US dollars are also facing adjustment pressure, which brings great uncertainty to foreign exchange investors, especially posing a potential risk of loss for investors holding long positions in the US dollar.
(II) The uncertainty of US tariff policy has increased
U.S. President Trump said on July 4 local time that the US government will start sending letters to trading partners starting on the same day to set a new unilateral tariff rate. The highest new tariff rate may reach 70%. "Eight or nine out of ten" will start from August 1. The U.S. government plans to send tariff letters to multiple countries, and is expected to be delivered by July 9. The new tariff rate may fluctuate between 10% and 70%, covering a wide range. This policy uncertainty has caused deep market concerns about global trade and economic growth, and the potential impact of tariff policies may disrupt global supply chain operations and curb energy consumption demand in major economies. outerIn the foreign exchange market, the expectation of escalating trade frictions has led to a warming of market risk aversion sentiment, and the flow of funds may change, affecting the supply and demand relationship of currencies in various currencies, causing currency exchange rate fluctuations to intensify, especially for currencies with high trade dependence, which may face depreciation pressure due to the deterioration of trade prospects.
Faced with the interweaving of positive and negative news in the foreign exchange market, investors need to pay close attention to subsequent policy dynamics and economic data releases, and flexibly adjust their investment strategies to cope with market uncertainty and volatility.
The above content is all about "[Aihua Foreign Exchange Decision Analysis]: Collection of Positive and Negative News that Influences the Foreign Exchange Market". 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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