Hello, I'm Andrea Russo, forex trader and creator of the SwipeUP Elite FX Method, which analyzes the market as a Hedge Found. Today I want to talk to you about the latest crucial economic news of the week that will influence the currency markets.
Let's start with the important trade meeting between the United States and China that took place in London. The negotiations, mainly focused on exports and rare earth metals, showed positive signs with optimistic statements from both sides. This event immediately brought an improvement in global sentiment, strengthening trade-sensitive currencies such as the Australian dollar (AUD) and the New Zealand dollar (NZD), while the US dollar recorded a slight decline.
The World Bank, on the other hand, tagged its 2025 global growth forecast from 2.8% to 2.3%. This downgrade reflects significant concerns for the United States, China and Europe, due to trade uncertainties and reduced investments. This scenario, however, could favor some emerging currencies, such as the Brazilian real (BRL) and the Mexican peso (MXN), which benefit from less restrictive monetary policies and a reduction in pressure on the US dollar.
Looking at Europe, the European Central Bank (ECB) has decided to further reduce rates, bringing them to 2%, with the possibility of further decreases of up to -0.25% by the autumn. This expansionary policy is dictated by the need to support a stagnant economy and contain inflation. Inevitably, this will put pressure on the euro (EUR), which is expected to weaken against major currencies, especially the dollar.
In the United States, on the other hand, all eyes are on the May CPI due on June 11. Inflation is expected to be 2.5%, and the publication of data that is above or below expectations could generate strong volatility on the dollar. A higher CPI would strengthen the dollar, reducing the likelihood of a rate cut by the Federal Reserve, while a lower reading could further weaken the greenback.
Finally, oil has also rallied, with WTI up 6% and Brent up 4%. This increase has been driven by a more favorable geopolitical context and the reduction of trade tensions. The effect on currency markets is direct, favoring commodity-related currencies, such as the Canadian dollar (CAD) and the Norwegian krone (NOK), while currencies such as the euro (EUR) and the Japanese yen (JPY), of oil-importing countries, could find themselves in difficulty.
In summary, the current week is proving to be crucial for Forex: declining trade tensions are supporting trade-related currencies, the ECB's accommodative monetary policy is weakening the euro, while US economic data will drive sentiment on the dollar.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.