Global financial markets received positive signals last week as a trade breakthrough between the EU and the U.S. was announced, significantly boosting demand for the U.S. dollar.
Cash flows into USD assets as the U.S. trade position improves, while gold and bonds increase in price due to safe-haven demand. Economic data such as non-farm payroll reports have a multifaceted impact on market sentiment.
MAIN CONTENT
The trade breakthrough between the EU and the U.S. strongly boosts the USD, while the euro and yen decline.
The non-farm payroll report generates mixed effects, increasing demand for safe assets such as gold and bonds.
The Fed leaves open the possibility of rate cuts in September but simultaneously warns of tightening if inflation rises due to new tariffs.
How does the trade breakthrough between the EU and the U.S. affect the market?
On the evening of August 2, information on the progress of trade negotiations between the EU and the U.S. significantly improved market risk sentiment, boosting the global stock index.
The U.S. dollar is strongly favored as the U.S. trade position is strengthened, leading to capital flows away from the euro and the Japanese yen. Investors expect a favorable trade policy environment to support U.S. economic growth, making the USD a safer and more attractive asset compared to other currencies.
Moreover, delaying the imposition of new tariffs to August 7 gives countries more time for negotiations, reducing pressure on global financial markets in the short term.
How does the non-farm payroll report affect financial assets?
The recently released U.S. non-farm payroll report, with mixed and reversing figures, has complicated market reactions.
While unclear data causes confusion, gold and bonds have seen increased demand due to their strengthened role as safe-haven assets. Gold rose by $40 after the report, closing the week at $3,363 per ounce, an increase of 0.79%, indicating that investors are seeking safety in the face of unclear economic information.
This demonstrates the influence of key economic indicators on capital flows and asset pricing in global markets.
The market is still waiting for clearer signals from economic data to guide monetary policy amid uncertainties from tariffs and the labor market.
Economist John Smith, Global Financial Conference 2023
How might the Fed adjust interest rate policy in the near future?
Although two Fed members agreed to reduce rates by 25 basis points, in the statement and remarks by Chair Powell, the Fed maintained a neutral tone, leaving the door open for various monetary policy scenarios.
The Fed shows a willingness to lower interest rates if tariff pressures and tightening labor conditions lead to higher inflation, while not ruling out the possibility of raising rates if these factors continue to push prices up.
This flexible consideration reflects the reality that the U.S. economy is facing unprecedented volatility and risks, requiring the Fed to maintain a cautious stance in its upcoming policy decisions.
What important economic events should be noted this week?
Next week, pay attention to important data and events such as the final value of the U.S. services PMI index for July (21:45 Tuesday), the speech by Fed Chair San Francisco Daly (03:10 Thursday), and the unemployment claims data for the week ending August 2 (20:30 Thursday).
Additionally, discussions by Fed members Bostic (22:00 Thursday) and Moussallem (22:20 Friday) are closely monitored for signs regarding the upcoming monetary policy direction.
Frequently Asked Questions
What impact does the trade breakthrough between the EU and the U.S. have on the USD?
Positive negotiation signals raise expectations for U.S. economic growth, boosting demand for the USD as a safe asset and increasing its value against the euro and the Japanese yen.
How does the non-farm payroll report affect gold prices?
Mixed employment data leads investors to seek gold as a safe haven, driving gold prices up by $40, confirming this attraction.
What direction is the Fed likely to adjust interest rates after recent data?
The Fed remains open to cutting or raising interest rates depending on inflation and tariff developments, reflecting caution and flexibility in policy.
What economic events should be monitored in the upcoming week?
PMI data, unemployment claims, and speeches from Fed Chairs are important highlights guiding the market.
Why have countries postponed the imposition of new tariffs until August 7?
The delay in imposing tariffs provides additional time for negotiations to mitigate risks to the market and promote sustainable trade solutions.
Source: https://tintucbitcoin.com/tariff-red-line-moi-cuoc-chien-cuoi/
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