Wonderful introduction:
Optimism is the line of egrets that are straight up to the blue sky, optimism is the thousands of white sails beside the sunken boat, optimism is the lush grass that blows with the wind on the head of the parrot island, optimism is the falling red spots that turn into spring mud to protect the flowers.
Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Analysis]: The Federal Reserve cuts interest rates as expected, and the EU announces sanctions on Israel." Hope it will be helpful to you! The original content is as follows:
On September 18, during the Asian market on Thursday, spot gold trading around $3,668.12/ounce. The Federal Reserve lowered interest rates by 25 basis points as expected. Federal Reserve Chairman Powell pointed out that the employment market was weak. Market participants interpreted the speech of Federal Reserve Chairman Powell. Gold prices fell from the record high of $3,703.35/ounce on Wednesday.
After the Federal Reserve cut interest rates by one quarter percentage point, the dollar fell to a four-year low against the euro, before turning the decline and moving higher in trading on the day. The rate cut, and the forecast that the two remaining policy meetings of the year, are expected to cut interest rates by one quarter of each point in the remaining two policy meetings this year, suggests that Fed officials have begun to downplay the risk of continued inflation in government trade policies.
Blair Shwedo, head of investment-grade sales and trading at Bank of America, said the Fed cut interest rates by 25 basis points. Risk assets and U.S. Treasury bonds both appear to be paying attention to the Fed's expectations that it will cut interest rates twice this year. Fed officials have gradually leaned towards the idea that Trump’s tariffs will only have a temporary impact on inflation, and the latest forecasts are consistent with this view.
This rate cut is the first action of the Federal Open Market www.qgrse.cnmittee (FOMC), which formulates policies, since December, reducing the policy interest rate to the range of 4.00%-4.25%. Despite U.S. President Trump on Monday calling for a "larger" cut to the benchmark interest rate, the 25 basis point rate cut is still widely expected.
Federal Chairman Powell said the Fed was in a "session-by-session decision-making state" in terms of interest rate outlook and characterized Wednesday's move as a risk management rate cut, adding that he did not see the need to act quickly on interest rates., which provides some support for the US dollar.
Federal Governor Waller and Vice Chairman Bowman, the regulation, support a more consistent pace of rate cuts, who are Trump-appointed officials who object to policy decisions to keep interest rates stable in late July.
Official data released by the Australian Bureau of Statistics (ABS) on Thursday showed that Australia's unemployment rate stabilized at 4.2% in August. This figure is in line with the market's general expectations of 4.2%.
In addition, Australian employment changes fell from 26.5K in July to -5.4K in August (corrected from 24.5K), while the market generally forecasts were 22K.
Australia's participation rate fell to 66.8% in August from 67% in July. Meanwhile, the number of full-time employment in the same period fell by 409,000 from the previous value of 636,000 (corrected from 605,000). Part-time employment increased by 355,000 in August, while the previous value fell by 371,000 (corrected from 359,000).
European inflation rate in August was confirmed at 2.0%, the same as in July, while the core CPI stabilized at 2.3% year-on-year. The service industry remains the main driver of inflation, contributing to the annual rate of +1.44 percentage points, followed by food, alcohol and tobacco (+0.62 percentage points) and non-energy industrial products (+0.18 percentage points). Energy is still a drag, minus -0.19 percentage points.
The entire EU CPI was finally determined to be 2.4%, which is also the same as last month. Inflation trends vary widely in different member states. Cyprus (0.0%), France (0.8%) and Italy (1.6%) had the lowest rates, while Romania (8.5%), Estonia (6.2%) and Croatia (4.6%) had the highest rates. www.qgrse.cnpared with July, the annual inflation rate of nine member states fell, four remained stable, and 14 member states rose.
UK inflation remained stable in August, with CPI remaining flat at 3.8% year-on-year, in line with market expectations. Prices rose 0.3% this month. The core CPI, excluding food, energy, alcohol and tobacco, fell from 3.8% to 3.6% year-on-year, lower than expected by 3.7%, which is another sign that the potential pressure is gradually easing.
www.qgrse.cnmodity prices provided offsets, rising from 2.7% year-on-year to 2.8%, the highest level since October 2023. In contrast, the service industry inflation slowed to 4.7% from 5.0%, indicating weak domestic price dynamics. Although the service industry is still at a high level, the correction in the service industry is significant given its importance in shaping medium-term inflation risks.
The Bank of England will meet tomorrow and expect to maintain interest rates to remain stable, but the CPI data for August will become a debate over the November decision. Weak core and service industry data show deflation is intact, and policy makers will consider it if upcoming growth and employment data reinforce this trendSpace for a rate cut.
The Federal Reserve cut interest rates by 25 basis points to 4.00-4.25%, in line with market expectations. The decision was not consistent, with newly confirmed interim president Stephen Mran opposing it in favor of a larger 50 basis points cut. However, the famous doves Christopher Waller and Michelle Bowman are in line with most, helping to anchor the results around the base situation.
The Fed reiterated in its statement that any further adjustment will be guided by upcoming data, changing prospects and risk balance. Cautious wording highlights policy makers’ preference for a gradual approach, avoiding urgency signals while still keeping the cycle of easing works.
The updated forecast confirms a modest path to rate cuts. The median federal funds rate is expected to drop to 3.6% by the end of the year, meaning two more 25 basis points cuts in October and December. For 2026, the Fed expects interest rates to be 3.4%, suggesting a rate cut that year only once, followed by another rate cut in 2027, slightly higher than the estimated long-term neutral rate of 3.0%.
In terms of the labor market, the Fed's outlook has improved slightly. The unemployment rate is currently expected to be 4.5% in 2025, 4.4% in 2026 and 4.3% in 2027, which is slightly better than the June forecast. This adjustment reflects people's confidence that the labor market can weaken without disintegration, and helps balance the inflation struggle with growth stability.
Inflation forecasts have also changed. Core PCE is currently expected to be 3.1% in 2025, and will drop sharply to 2.6% in 2026 before further slowing to 2.1% in 2027. The 2026 forecast is raised from 2.4%, which may reflect temporary tariff-related pressures, but the trajectory still indicates that inflation returns to near-target levels in the medium term.
The Bank of Canada cut overnight interest rates by 25 basis points to 2.50% at today's meeting, in line with general expectations. The move highlights the central bank's efforts to provide additional support as Canada's economy struggles with weak growth and weak inflation risks.
The management www.qgrse.cnmittee said in a statement that "there is less risk of economic weakness and inflation upward" proves the rationality of the rate cut and helps better balance risks. The Bank stressed that changes in global trade continue to "increase costs" even though they "put pressure on economic activity."
Looking forward, policymakers say they will closely monitor how U.S. tariffs and changing trade relations affect exports, investment, employment and household spending. They also point to the risks that supply chain restructuring may pass on higher costs to consumers, and stressed that inflation expectations remain a key guide to future decision-making.
The above content is all about "[XM Foreign Exchange Market Analysis]: The Federal Reserve cuts interest rates as expected, and the EU announces sanctions against Israel". It is carefully www.qgrse.cnpiled and edited by the editor of XM Foreign Exchange. I hope to trade for you.Helpful! Thanks for the support!
Due to the author's limited ability and time constraints, some content in the article still needs to be discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: