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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Official Website]: China and the United States intend to ease the trade war, and the US dollar has finally stabilized." Hope it will be helpful to you! The original content is as follows:
After Thursday’s decline, the US dollar (USD) regained its strength against its competitors early on Friday as markets evaluated the latest headlines on U.S.-China trade relations. Statistics Canada will release retail sales data for February later that day, and the University of Michigan will release revised data for April's consumer confidence index.
After falling 0.5% on Thursday, the U.S. dollar index approached 100.00 in early trading on Friday. U.S. President Donald Trump confirmed late Thursday that he had a meeting with Chinese officials earlier in the day. In addition, Bloomberg quoted people familiar with the matter and said that China is considering suspending 125% tariffs on some U.S. imported goods (including medical equipment and ethane) while discussing exemption of aircraft rental tariffs. U.S. stock index futures rose 0.1% to 0.5% in early trading on Friday, after major Wall Street indexes recorded strong gains on Thursday.
Eli Lee, chief investment strategist at OCBC Bank in Singapore, said: "The threatening peak of tariff levies may have passed. In terms of the US-China standoff, both sides said they will not further increase tariffs on the existing basis."
This round of tit-for-tat tariff dispute began with US President Trump's announcement of a significant increase in import tariffs on April 2, which triggered concerns about stagnation in trade between the two major economies around the world and cast shadows the global growth prospects.
Francesco Pesole, a foreign exchange strategist at Dutch International, said in a note to clients: "Market participants may feel that they have somehow regained ‘control’ of the U.S. government, which can drive them to take a more friendly stance on key issues. InvestorsMore confirmation about the tendency of the US attitude toward optimism will be sought to support the further rise of the US dollar. ”
The pressure on the U.S. Treasury market has eased. Previously, Trump’s tariff storm weakened market confidence in U.S. leadership and assets, resulting in a massive sell-off in U.S. Treasury bonds, while the 10-year U.S. Treasury yields remained at 4.30% on Friday. As Tokyo inflation data was higher than expected, Japan’s Treasury yields also rose on the entire yield curve.
Although the market seemed calm on the surface, there were many warning signs that this state might not last long.
After the Politburo meeting held earlier on Friday, China said it would promptly lower the reserve requirement ratio (RRR) and interest rates. Meanwhile, PBOC President Pan Gongsheng said they will implement moderately loose monetary policies to promote the development of China's economy. After a rise of about 0.8% on Thursday, the Australian dollar/dollar maintained a consolidation phase around 0.6400 in early trading on Friday.
Bloomberg reported on Thursday that the European Central Bank (ECB) is preparing to revise its monetary policy framework to be more flexible in response to price shocks amid rising global volatility. The euro/dollar strives to maintain its foothold, trading around 1.1350 at the opening, in a negative area.
The UK National Statistics Office announced on Friday that retail sales in March increased by 0.4% month-on-month. GBP/USD responded to this data with a 0.7% increase better than the 0.4% decline recorded in February, and was well above the market expectations. GBP/USD responded to this data with the latest report around 1.3300 and falling more than 0.2% intraday.
The US dollar/yen rose more than 0.6% intraday, trading around 143.50 in early trading on Friday, setting a 10-day highest level. Bank of Japan Governor Kazuo Ueda reiterated on Thursday that if underlying inflation converged to its 2% inflation target, the central bank would continue to raise interest rates.
Gold prices were at a disadvantage on Friday, erasing almost all gains on Thursday, and this week it looked like It will almost close with losses. The trade conflict between the United States and China is becoming increasingly chaotic, and US President Donald Trump gives the impression that negotiations are underway, and China denies that. As of now, it is hovering around 3300.
Euro: The outlook for the euro/dollar has not changed, and intraday bias remains moderate downward. A short-term top pullback from 1.1572 may continue to move lower. But the downside should be bound by the 38.2% retracement level of 1.1039 from 1.0176 to 1.1572. On the plus side, breaking through 1.1572 will resume a larger upward trend.
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