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PPI cooling + interest rate is imminent, New York dollar/USD "fragile equilibrium"
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Hello everyone, today XM Forex will bring you "[XM Forex Market Review]: PPI cooling + interest rate talks are imminent, the "fragile equilibrium" of the New York dollar/USD". Hope it will be helpful to you! The original content is as follows:
On Tuesday (August 19), in the early European session, the New York dollar/USD (NZD/USD) traded around the 0.5920 line, maintaining a narrow range of fluctuations. In terms of market factors: CME's FedWatch tool shows that the market's probability of the Fed's 25 basis points cut rate in September remains at 84%, which is in line with the market's forward-looking view of this week's Jackson Hall annual meeting and policy guidance expectations for this week's speech to Powell. At the same time, the interpretation of the geopolitical situation "will take a step further towards negotiations" boosts risk appetite.
On the other hand, the interest rate settlement of the New Zealand Federal Reserve (RBNZ) was about to reach Wednesday, and the market has basically included a 25 basis point cut rate to 3%. New Zealand's PPI input increased by only 0.6% month-on-month in the second quarter, significantly lower than the 1.4% expectation and the previous 2.9% increase; during the same period, PPI output was 0.6% month-on-month, lower than the 1.0% expectation and slowed down from the previous 2.1%. The above factors together shape the current price structure and emotional framework.
Fundamentals
From the macro expectations, the market is still pricing around the main line of "the United States enters a loose cycle". The 84% probability of interest rate cuts in September strengthens the chain logic of "interest rate decline - US dollar decline - high beta currency benefits", allowing the New York dollar to be re-ventilated. Against this background, Jackson Hall annual meeting becomes the core source of short-term volatility: if Powell emphasizes "data dependence and patience", it will be the same frequency as the rate cut bet; if the statement of inflation stickiness is stronger, the US dollar may recover in stages, and the New York dollar is under pressure. Geographical level According to Reuters, the signal of concern to the outside world lies in the "potential tripartite talks path": the US and Ukraine have released their willingness to promote a meeting with Russia, although the Kremlin has not made it clearPublicly confirmed, but news that “the meeting may be arranged in Hungary” has boosted the emotional resilience of risky assets.
For the New York dollar, improvement in risk appetite is usually transmitted to the exchange rate through bulk and foreign exchange risk factors. In New Zealand, the market generally expects RBNZ to cut interest rates by 25 basis points to 3%, which confirms the weak growth and slowdown in PPI: PPI input in the second quarter +0.6% month-on-month (expected +1.4%, previous value +2.9%), and PPI output +0.6% month-on-month (expected +1.0%, previous value +2.1%). This means that the inflation transmission between the cost side and the selling price side is cooling down, and RBNZ's path to "take small steps ahead and loose - observe the impact of lag" is reasonable. xmltrust.comprehensive pricing framework: Fed's easing expectations dominate the medium-term direction, RBNZ rate cuts affect short-term interest rate spreads and sentiment, and geopolitical news provides random disturbances to volatility.
Technical:
On the chart, the Bollinger middle rail is located at 0.5939, the Bollinger upper rail is 0.5986, and the lower rail is 0.5892; the current price is around 0.5920, below the middle rail and close to the middle and lower part of the range. The recent high was 0.5995, and the retracement low was 0.5906 and earlier 0.5880. MACD shows that DIFF is -0.0006, DEA is -0.0005, the bar chart is about -0.0001, the negative value narrows, and the zero axis tends to passivate, showing the prototype of "weak passivation + possible golden cross expectation under the zero axis"; RSI (14) is 42.3812, in a weak oscillation zone of 40-50, and has not yet formed oversold.
Structurally, the Bollinger middle rail of 0.5939 is a real-time "long and short watershed"; the upper resistance is 0.5986 (Bolet upper rail) and 0.5995 (former high), and the integer mark of 0.6000 constitutes psychological resistance; the lower support focuses on 0.5892 (Boletlinger lower rail), 0.5906 (retracement low) and 0.5880 (former low). If the subsequent "middle track volume breaks upward and moves upward with the MACD zero axis", it can be regarded as a short-term trend from "weak consolidation" to "strong consolidation"; on the contrary, if it effectively falls below 0.5892 and enlarges the entity, the probability of "lower track backtesting - range downward" increases. Overall, it is still in the mean regression stage with a milder Bollinger bandwidth, and the market is more sensitive to event-driven.
Prevention of market sentiment:
From the reflexive framework of "Funds and Emotion-Price", the marginal repair of recent risk appetite is more reflected in "reducing discounts to uncertainty" rather than chasing trends: the rebound in the equity market sentiment and the cooling of the heat of safe-haven assets bring passive support for high β currencies, but since the main macro line still depends on "rate reduction range and rhythm", the sentiment shows "prudent optimism". For the New York dollar, the slowdown in PPI data has lowered the concerns of accelerating inflation and reduced the "worries about easing"; however, the interest rate spread advantage has not been established, and the preference for the capital side is still a "relative allocation" rather than a "trend increase allocation".
Trading level, currentLike "Swing Trading Environment in Event Window": RSI is located in the neutral weak zone, MACD negative value converges, and the technical indicator resonance shows "A trigger is required upward". Once Jackson Hall's caliber dove or geopolitical negotiations are positively implemented, emotions are expected to promote a "volume breakthrough"; if the remarks are biased or the news fails, the previous repair will be easily surrendered. In other words, market sentiment is still in a "fragile equilibrium" that can be easily repriced by events.
Risks and checkpoints: 1) The wording of Jackson Hall and Powell; 2) The forward-looking guidance in the RBNZ policy statement is different from the voter's xmltrust.committee; 3) The pace of geopolitical news; 4) If the US data is unexpectedly strong, the US dollar's "technical rebound - fundamental reassessment" will increase the upward resistance of the exchange rate.
The above content is all about "[XM Forex Market Review]: PPI cooling + interest rate is imminent, the "fragile equilibrium" of the New York dollar/USD" is carefully xmltrust.compiled and edited by the XM Forex editor. I hope it will be helpful to your trading! Thanks for the support!
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