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Hello everyone, today Avatrade Avatrade Ava Foreign Exchange will bring you "[Ava Ava Foreign Exchange Decision Analysis]: The Federal Reserve remains silent, and Trump is "sarcastic" to Powell again. Hope it will be helpful to you! The original content is as follows:
This week kicked off with a rare collective surge in Asian currencies, and the Federal Reserve held steady to boost the dollar back to above the 100 mark. The United States and Britain reached the first formal trade agreement and the first dialogue between China and the United States will start after the trade war stimulated a huge outbreak of risk sentiment. Coupled with China's interest rate cuts, global stock markets returned to the level before Trump announced the "Liberation Day" global tariffs.
The U.S. and the United Kingdom reached a trade agreement, which made the market look forward to the prospect of progress in trade negotiations between the United States and other countries. US stocks rebounded sharply on Thursday, with the Dow Jones Industrial Average soaring more than 650 points, and the U.S. dollar index once rose 1.15% to 100.76. The cooling of safe-haven demand caused gold to plummet to $3,289.1.
The United States and the United Kingdom announced a trade agreement on Thursday, May 8, the first formal trade agreement reached by US President Trump since launching a global reciprocal tariff policy. The "overall framework" agreement maintains 10% tariffs on UK imports but lowers high U.S. tariffs on UK automobile exports. In exchange, the UK agreed to reduce its tariffs on U.S. goods from 5.1% to 1.8% and give greater access to U.S. goods.
On May 6 local time, after the news that senior Chinese and American officials will meet in Switzerland was released, it pushed US stock index futures to rise sharply, and then optimism continued to the Asian market. Affected by uncertainty caused by US President Trump's tough tariff policy, Wall Street stock market fell one after another in the past two days.
The Office of the U.S. Trade Representative and the Treasury Department said Greer and Becente will set off on Thursday (8th) and will meet with Swiss Federal President Karin Keller-Sutter in Geneva to discuss reciprocal trade negotiations between the two countries.
After the Swiss trip was reported, US Treasury Secretary Scott Besent said in an interview with Fox News that the talks will focus on "cooling" rather than reaching an agreement, but he pointed out that the current tariff levels are unsustainable.
During the US's statement, a spokesperson for China's Ministry of avaforexcn.commerce confirmed that China has agreed to re-engage with the US. According to Bloomberg, the Chinese delegation will be led by China's Vice Premier He Lifeng. He Lifeng is widely regarded as China's economic "tsar" and chief trade negotiator.
Forex Market:The US dollar index fluctuated higher overall this week, closing at 100.43, recording an increase for the third consecutive week. At the beginning of the week, the dollar fell due to uncertainty about the trade situation. In the early morning of Thursday, Powell sent a hawkish signal and reiterated his willingness to wait for the prospects to become clearer, and the US dollar index rose. In terms of non-US currencies, Asian currencies collectively strengthened at the beginning of the week, with the RMB, Hong Kong dollar, Taiwan dollar, Japanese yen, Singapore dollar, etc. all rising against the US dollar, forming a "currency storm". Among them, the Hong Kong dollar has been in exchange for the top 7.75 consecutively, and the Hong Kong Monetary Authority has continuously bought US dollars to defend the exchange rate system; the New Taiwan dollar has risen by more than 9% in two days and has exceeded the 30 mark. But as the dollar strengthens and trade tensions subside, the panic appreciation of Asian currencies has gradually stopped for days. In addition, as the United States and the United Kingdom reached a trade agreement and the Bank of England cut interest rates by 25 basis points after the Federal Reserve kept interest rates unchanged, the pound sterling recorded three consecutive trading days of decline this week; the euro was expected to close against the dollar for the third consecutive week, and the dollar was expected to close against the Japanese yen for the third consecutive week.
Gold Market:Spot gold rose first and then fell this week, closing at $3326.56 per ounce. At the beginning of the week, spot gold rose by nearly $100 during the day, driven by weakening the dollar and safe-haven demand, and thanks to Asian buyers returning to the gold market after the holiday. Starting Wednesday, spot gold turned down as the market was optimistic about trade negotiations and the strengthening of the dollar, but it did not avaforexcn.completely erase the previous gains and closed higher this week.
Crude Oil Market: International oil prices experienced a sharp drop and surge this week, as market news said OPEC+ will continue to accelerate production growth. Crude oil opened on Monday and gradually rebounded. Due to increased demand in Asia and Europe, decline in US production, and Israel's escalation again, international oil prices rose sharply, recording the first increase in three weeks this week.
Review this week The Federal Reserve keeps interest rates unchanged The Federal Reserve maintains the benchmark interest rate for the third consecutive meeting in the range of 4.25%-4.50%, and the probability of maintaining interest rates in June exceeds 80%. The statement said the economy expanded steadily, but the risk of inflation remained and the unemployment rate remained low. Powell emphasized "waiting" 22 times, saying that the rate cut needs more data to support it and opposes premature action. Trump criticizes the United StatesThe Fed lags Trump mocked Powell as "too late Powell", accusing him of not following the global interest rate cuts, and saying that the US economy could have "taken off" due to loose policies. He refused to meet with Powell, saying the conversation was "like playing the piano against a cow." The United States and Britain reached a framework trade agreement The two sides agreed to reduce tariffs on some goods (such as the British automobile tariffs reduced to 10%), but the United States retains a 10% "reciprocal tariff" on the EU. The EU threatens to counter US goods with a hundred billion euros, and if negotiations break down, it will escalate the tariff war. Trump's tariff policy continues to increase Plan to impose 100% tariffs on overseas production of movies, impacting Hollywood's global supply chain. Refused to exempt Canadian goods tariffs, saying "Canadian cars are not needed" and questioned why the United States subsidizes Canada. Plan to abolish the Biden-era restrictions on AI chip exports and simplify semiconductor trade rules. India and Pakistan have the most serious confrontation in 20 years India and Pakistan have stormed the "terrorist camp" in Pakistan. Pakistan counterattacked and shot down Indian fighter jets and announced the "copper wall and iron wall" operation. The two sides accused each other of the drone attacks. Trump proposed mediation, but U.S. Vice President Vance said the conflict "has nothing to do with the United States." The situation in the Middle East is turbulent Israeli air strikes on Houthi armed targets in Yemen. Trump announced that the US should suspend its attack on Houthi, saying that the other side agreed to stop blocking the waterway. Israel said it was "unaware" of the US decision, highlighting the policy differences between the US and Israel. China introduces a avaforexcn.combination of market stabilization punch The central bank lowers the reserve requirement ratio by 0.5 percentage points, lowers the policy interest rate by 0.1%, and establishes a 500 billion yuan consumer pension re-loan; the State Administration for Financial Regulation accelerates the reform of real estate financing; the China Securities Regulatory avaforexcn.commission supports the role of "standard funds". The Bank of England cut interest rates again The benchmark interest rate fell to 4.25%, raising GDP forecast for 2025 to 1%, and predicting inflation to fall to 2% in 2027. The market is expected to cut interest rates at most twice this year. OPEC+Production cut discipline faces test Saudi warned that oil-producing countries that failed to meet the standards will face pressure. Kazakhstan said it is considering fulfilling its production cut obligations and the market is concerned about whether it can curb the decline in oil prices. U.S. military senior layoffs Secretary of Defense Hegseyth ordered a 20% reduction in four-star general position and optimize the avaforexcn.command structure, and critics questioned the risks of politicization. New energy vehicle avaforexcn.companies' "intelligent driving" discourse shifts Ideal and Xiaomi and other brands will adjust their publicity focus from "intelligent driving" to "auxiliary"Assist driving, avoid disputes over technical standards and legal liability. Summary of core trends The above content is about "[Ava Foreign Exchange Decision Analysis]: The Federal Reserve holds its hands and Trump is "sarcastic" to Powell. It is carefully avaforexcn.compiled and edited by the Avatrade Foreign Exchange editor. I hope it will be helpful to your transactions! Thank you for your support! In fact, responsibility is not helpless, not boring, it is as gorgeous as a rainbow. It is this colorful responsibility that has created a better life today. I will work hard to organize the article.
1. The Federal Reserve remains unchanged, and Trump continues to put pressure on monetary policy
2. Trade game and tariff war spread
3. Geopolitical conflict escalates
4. Adjustment of global financial and energy policies
5. Trends in the military and technology fields