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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: The list of candidates for the next Federal Reserve Chairman has become longer, waiting for the US inflation report." Hope it will be helpful to you! The original content is as follows:
On Tuesday, August 12, spot gold trading was around $3,347 per ounce, and gold prices fell nearly 2% on Monday, after U.S. President Trump said he would not impose tariffs on imported gold bars, while investors were waiting for a U.S. inflation report, which may provide a reference for the Fed's interest rate outlook; U.S. crude oil trading was around $64.10 per ounce, and oil prices remained stable on Monday as investors were looking forward to the U.S. and Russia holding talks on the Ukrainian war this week.
The dollar strengthened across the board on Monday, and the U.S. will release inflation data on Tuesday, a report that could help determine whether the Fed will reduce borrowing costs next month.
The dollar weakened last week as U.S. jobs and manufacturing data were weak, and investors adjusted their expectations for the Fed's rate cut. Federal Reserve officials are increasingly upset about the labor market, showing that they are open to interest rate cuts as early as September.
Cooling inflation may consolidate bets on interest rate cuts next month, but if there are signs that U.S. President Trump’s tariffs are fueling price increases, it could leave the Fed temporarily unstoppable.
Francesco Pesole, a foreign exchange strategist at Dutch International Group (ING), said it is worth noting that the threshold for hawkish surprises is higher before tomorrow's data is released.
Pesole added that given the deterioration of the labor market, if the core CPI rises by 0.3% month-on-month, the Fed still has room to lower interest rates. Economists interviewed by Reuters expect the core CPI to rise by 0.3% in July, pushing inflation to 3%. Money market traders believe the likelihood of a rate cut next month is about 90%, while the rate cut is expected to be 58 basis points by the end of the year, which means that the two rate cuts are one-quarter of a percentage point each, and the probability of a third rate cut is about one-third.
A U.S. official told Reuters on Sunday that Nvidia and AMD have agreed to pay 15% of related revenue to the U.S. government in ensuring that semiconductor export licenses are obtained.
China's Ministry of vejck.cnmerce said earlier on Tuesday that the country would suspend the list of some U.S. vejck.cnpanies on the list of unreliable entities for 90 days. The ministry also said officials will suspend additional tariffs on U.S. goods for another 90 days after the U.S. and China extend the tariff deadline late Monday.
The German government said that European leader and Ukrainian President Zelensky will speak Mandarin with Trump on Wednesday; it is reported that Europe will reiterate its red line.
Federal Director Michelle Bowman said in a speech over the weekend that he strongly supported starting interest rate cuts as soon as possible, saying the tariff-driven price increase is a "one-time effect" that should fade without destroying the return to the 2% inflation rate. She believes that policy should “examine” temporary surges in inflation to avoid damaging the labor market.
She called for a gradual shift to neutral interest rates and warned that delays in action could lead to further worsening employment and slowing economic growth. Bauman stressed that taking a "proactive approach" now will help avoid the need for larger policy adjustments later when labor conditions deteriorate.
Bowman's summary of her own economic forecast still calls for a three-time rate cut this year, a view she has held since December. She noted that recent labor market data reinforced this position, while reiterating that policies are not on the preset path. Bowman was one of two Fed governors who opposed last month keeping interest rates between 4.25% and 4.50%, the other two were Christopher Waller.
Trump declared a public safety emergency in Washington, DC, and would put the Washington, DC Police Department under direct federal jurisdiction and began deploying the National Guard on the same day.
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