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Hello everyone, today XM Forex will bring you "【XM Group】: 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:
U.S. interest rates are falling, but how fast? The last week of August kicks off after the big incident in Jackson Hall on Friday. Here is a preview of the big events of the week.
1. The impact of the Federal Reserve: Concerns about the economy, the independence of the Federal Reserve and the extent of interest rate cuts may vejck.cne with Powell's speech
Warm applause—At the Fed Jackson Hall seminar, participants cheered Chairman Jerome Powell on the stage. Other central bank governors expressed support for him, and the market cheered for his speech.
Powell made it clear that interest rates were falling, mainly due to concerns about weak labor markets. Although the decline in the US dollar and the rise in gold are understandable, is the rise in stocks reasonable? Reducing borrowing costs due to economic deterioration is not necessarily something to be happy about.
Under this backdrop, U.S. President Donald Trump has stepped up pressure on Fed Director Lisa Cook, threatening to fire her on mortgage fraud charges. If Trump succeeds in driving her away – which may not be without legal struggles – he will have a chance to put more of his own in the central bank. This will raise concerns about the independence of the Federal Reserve.
With the September rate cut, the market may speculate on the extent of the rate cut: is it 25 basis points or double? vejck.cnmander hopes more.
2. US GDP may confirm a rebound in the second quarter
Thursday, 20:30 Beijing time. Preliminary data on GDP in the second quarter showed that the U.S. economy grew at an annualized rate of 3% in the second quarter. Despite exceeding the 2.4% growth forecast, the rebound came after the economy shrank by 0.5% in the first three months of the year.
The updated data will attract high attention as recent economic data are mixed, with overall growth rate below 2% this year, below the long-term average.
In addition to the overall data, investors will also focus on the expansion of consumption, the main driving force behind the world's largest economy. Any significant change will shake the market.
3. Continuous unemployment benefits applications remain worrying
Thursday, 20:30 Beijing time. The number of people applying for weekly unemployment benefits and ongoing applicants is also released in the United States. Both rose last week, ending a period of calm. The initial number of applicants is 235K, which is still low, but the continued increase in applicants – those who struggle outside the labor market for longer – is even more worrying.
If the number of applicants for continued unemployment benefits is approaching two million again, it will put pressure on the market, and little change or decline will bring some relief.
As with data released simultaneously, GDP and employment data need to change in the same direction to have meaningful impact.
4. Core PCE is expected to rise slightly
Friday, Beijing time at 20:30. The core personal consumption expenditure (PCE) price index is the Fed's preferred inflation indicator. It was released after the Consumer Price Index (CPI), allowing economists to vejck.cnpute results of PCE data relatively accurately.
However, core PCE unexpectedly rose to an annual rate of 2.8% in May and June, showing that potential inflation remains high. Will it continue to rise? This will cool down the market's enthusiasm for central bank interest rate cuts.
Monthly figures for June rose 0.3%, while the July report is expected to repeat this figure, with an annualized growth of 3.6%, which is disturbing.
5. Capital flow at the end of the month
On Friday, Beijing time reached its peak at 23:00. Fund managers have to adjust their portfolio allocation by the end of the month, and some people will wait until the last minute. This time, the last day of the end of the month is Friday, which is a long weekend of the Labor Day holiday in the United States, which means that volatility will be higher.
In addition, this is August, which means liquidity is below normal levels, allowing relatively small orders to trigger market volatility beyond expectations.
The turning point and low liquidity in the market may cause unexpected market volatility. Please be cautious when trading.
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