Wonderful introduction:
Green life is full of hope, beautiful fantasy, hope for the future, and the longed-for ideal is the green of life. The road we are going to take tomorrow is lush green, just like the grass in the wilderness, releasing the vitality of life.
Hello everyone, today XM Forex will bring you "[XM Forex Platform]: Gold and US dollars plummeted, U.S. stocks soared, and the Fed's QT policy reached an inflection point." Hope this helps you! The original content is as follows:
On Monday, the U.S. dollar index fluctuated downwards, and finally closed slightly down 0.13%. As of now, the U.S. dollar is quoted at 98.60.
Amazon plans to lay off up to 30,000 people.
Zelensky: Work with allies to formulate a ceasefire plan within seven to ten days.
Mexican President Sheinbaum: The United States has extended the deadline for trade negotiations by several weeks.
Philippine central bank official: Gold reserves are "excessive" and part of them should be sold to make a profit.
U.S. President Trump: I haven’t really thought about running for a third term in 2028.
Due to the lack of key economic data due to the government shutdown, the Federal Reserve's decision-making will fall into the dilemma of "flying blindly". Although there is a precedent for a 35-day shutdown in 2018-2019, this time the environment is more dangerous: the U.S. economic growth is slowing down, fiscal policy is in chaos, and monetary policy is already in a state of tightening. Any policy missteps or signaling misalignments could disrupt markets, overtighten financial conditions, or even reignite the inflationary flames.
The market generally expects the Federal Reserve to cut interest rates by 25 basis points, but the wording and tone of the policy statement are the real winner. If rate cuts are accompanied by hawkish jq.xmxmxm.cnments, U.S. stocks will suffer setbacks due to the strength of real yields and the U.S. dollar after their initial rise, and international spot gold will also be under pressure. However, if it cooperates with dovish guidance, it may start an easing cycle and promote a full carnival of risk assets. A more aggressive 50 basis point interest rate cut will only occur when private data or market turmoil show that the economy is accelerating in deterioration. Although it will trigger a carnival in risk assets, it may also reveal that the Fed has crisis signals that are unknown to the market.
Another possibility is to stay on hold but release dovish forward guidance. This wait-and-see attitude, if jq.xmxmxm.cnmunicated properly, can stabilize the market, but if it is interpreted as indecision, it will trigger volatility. The most dangerous scenario is to maintain interest rates while sending a hawkish signal. If Powell mentions terms such as "sticky inflation" or "premature easing," the market should be prepared for a perfect storm of a plunge in the S&P 500 index, a surge in the U.S. dollar, a fall in international spot gold, and a collapse in leveraged trading.
In this data fog, Powell will rely more on "soft data" such as ISM data, initial filing data and market inflation expectations, but these alternative indicators tend to fluctuate violently and lag behind. The real risk lurks here: as central banks fumble through the fog, any policy changes could trigger unexpected reverberations in the valley.
This week will be crucial for the US dollar, with a number of major events about to take place. Market focus will be on the Federal Reserve policy meeting early Thursday morning. The market generally expects a 25 basis point interest rate cut. Investors will also be closely watching whether the Fed announces an end to quantitative tightening, jq.xmxmxm.cnments on the government shutdown and its economic impact, and its stance on recent regional banking issues. The political agenda is equally busy. According to Polymarket forecasts, the most likely scenario is that the government shutdown will be lifted before the end of this month.
Overall, we expect incoming data and the outcome of the Fed meeting to reinforce our view of a weaker dollar through the end of the year. The US-China trade negotiations are still a variable affecting the trend of the US dollar, but the outcome is still full of uncertainty. In this environment, we believe selling downside risks on a break below 1.1540 for EURUSD remains attractive.
The core CPI in September rose 0.23% month-on-month, lower than market expectations, and the year-on-year increase slightly dropped to 3.02%. The increase in living costs slowed to 0.21% (previous value: 0.44%, average of the past three months: 0.28%), with rental inflation decelerating (0.20% vs. previous value: 0.30%), and owner equivalent rent (OER) inflation declining more significantly (0.13% vs. previous value: 0.38%). The OER deceleration is mainly due to record low readings in New England (possibly statistical noise) and normalization in small Southern cities after a spike in August. Excluding these two areas, we estimate that OER will increase by approximately 0.24% this month. While OER readings are likely to strengthen in the jq.xmxmxm.cning months due to a reversal of volatility this month, we still expect rents to move along with OER.Inflation will continue to decelerate, as the slowdown in new lease rental growth will gradually be transmitted to official inflation statistics.
Core jq.xmxmxm.cnmodity inflation remained strong, with a month-on-month increase of 0.2%: clothing rose 0.7%, entertainment supplies rose 0.4%, personal care products rose 0.4% (Goldman Sachs seasonally adjusted), auto parts rose 0.3% (Goldman Sachs seasonally adjusted), home decoration rose 0.2%, and new car prices rose 0.2%. jq.xmxmxm.cnputer software prices fell sharply again (-3.7%, previous value -4.9%). Auto insurance, car rental and leasing prices all fell, collectively dragging down the core CPI by about 2 basis points. The overall CPI increased by 0.31% month-on-month, mainly driven by a 1.51% increase in energy prices and a 0.25% increase in food prices.
Although the core CPI was slightly lower than our expectations, some core jq.xmxmxm.cnmodity jq.xmxmxm.cnponents with a higher weight in the PCE rose more than expected, while the increase in OER with a lower weight in the PCE was much lower than expected. Based on the details of the CPI report, we estimate that the core PCE price index rose by 0.24% month-on-month in September (an increase from the 0.21% estimate before the CPI was released), corresponding to a year-on-year increase of 2.87%. At the same time, we expect the overall PCE price index to increase by 0.30% month-on-month and 2.83% year-on-year. The market-oriented core PCE is expected to increase by 0.18% month-on-month.
The Federal Open Market jq.xmxmxm.cnmittee is expected to cut interest rates by another 25 basis points at the October meeting, bringing interest rates to 3.75-4%. The median forecast in the September dot plot shows three rate cuts this year as the baseline scenario. With official data on hold due to the government shutdown, alternative labor market data have been mixed at best, and there is currently no reason to deviate from original plans to support the labor market.
We do not expect the meeting to provide formal guidance on the December rate meeting, but if asked, Chairman Powell may be inclined to cite the September dot plot, which suggested a third rate cut in December. We think a December rate cut is highly likely as the dot plot has set it as the benchmark and the FOMC has implemented risk management with three consecutive rate cuts in the past. We doubt that the labor market data to be released by then - which will be affected by both the Department of Education's delayed resignation plan and the impact of the government shutdown on data collection - can send a convincing signal of "good news across the board".
We continue to expect the economy to strengthen slightly next year as the drag on growth from increased tariffs will lessen, the boost from the fiscal bill will be felt, and financial conditions will remain loose. Our current preliminary forecast is for two 25 basis point rate cuts in March and June 2026, taking terminal rates to 3-3.25%, but these rate cuts may be brought forward if labor market data continues to be weak; if the economy performs more solidly and the FOMC decides to wait for inflation to move closer to its 2% target, the rate cuts may be delayed.
The Federal Reserve has hinted that it will cut interest rates by 25 basis points to 3.75-4.0% at the October meeting. We also expect the FOMC to announce the end of the balance sheet reduction. We think the Fed will acknowledge the recent strength in economic activity. However, the trend of the overall policy focus shifting to employment mission may not change. It is also unlikely that Powell will provide clear guidance beyond this meeting due to the lack of official sector data and the conflict between employment and consumption.
Due to the government shutdown, we have not had much data since the September meeting. Although the Bureau of Labor Statistics will release its September CPI report on October 24, the September jobs report (and retail sales) will almost certainly not be released before the Fed meeting, even if the shutdown ends at the beginning of this week. As a result, there will be no material change in the Fed's message: While inflation remains elevated, policymakers are slightly more focused on downside risks to the jobs mandate.
We did learn at the end of September that second-quarter GDP growth was revised sharply from 3.3% to 3.8%. Third-quarter growth should also remain solid as spending in August beat expectations and July data was revised upwards. In fact, our own tracking GDP estimate for the third quarter is 2.8%, due in large part to strong consumption growth. Total household credit card spending increased by 2.0% year-on-year in September. The data we have for October shows that growth in total credit card spending per household has remained steady at about 2% year-on-year.
As a result, we believe the first sentence of the FOMC statement will be modified to acknowledge this rebound in economic activity. For example, it might say: "Recent indicators show that economic activity has been expanding at a solid pace." The jq.xmxmxm.cnmittee might also add some language to explain that its assessment of economic conditions has been affected by the lack of data due to the shutdown. We do not anticipate any changes to the language in the statement regarding the balance of risks or forward guidance.
Our US rates strategy team now expects the Fed to announce the end of quantitative tightening (balance sheet reduction) at the end of October, rather than at the end of the year. This will also be reflected in the statement.
The above content is all about "[XM Foreign Exchange Platform]: The gold dollar plummeted and US stocks soared, and the Fed's QT policy reached an inflection point". It was carefully jq.xmxmxm.cnpiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
Every successful person has a beginning. Only by having the courage to start can you find the way to success. Read the next article now!