Thread: ForexMart's Forex News

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The markets of Europe and Asia have gone up after the publication of the CPI report in the USA

European futures, Asian stock indexes and regional currencies began to rise after the publication of a report on consumer inflation in the United States and strengthening hopes for an early Federal Reserve rate cut.

The report showed that core consumer inflation in the United States over the past year was at its lowest level in three years, which fueled hopes for a softer monetary policy by the Fed.

The dollar index fell to a one-month low as the dollar weakened against all major world currencies from the top 10. The Euro Stoxx 50 futures contract rose 0.3%, and Wall Street stock indexes reached new highs on Wednesday. Similar dynamics were observed in Asian markets.

Among Asian currencies, it is worth noting the growth of the Korean won, while the yen was trading at its highest level in the last week against the dollar.

The Australian dollar declined after the unemployment rate in the country in April did not meet analysts' expectations.

An analysis of the swap market shows that two Fed interest rate cuts are now expected in 2024, as opposed to one reduction expected earlier this year. The general data on core inflation gives the Fed an opportunity to consider an earlier rate cut, and the market is inclined to believe that this could happen as early as September this year.

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The main events by the morning: May 21

The US Congress is concerned about the gradual abandonment of the dollar. Republican Thomas Massey said that countries are forced to abandon the American currency, including due to inflation. He is confident that other countries will start using alternative currencies, and the United States will have to rely only on the resources of its citizens.

China continues to get rid of American debt by selling a record amount of U.S. bonds in the first quarter of 2024. During this period, China sold bonds worth $53.3 billion, which is a historical record. Experts believe that the reason for this is the use of the dollar by the United States as a weapon. Contradictions arise, as users of the dollar see injustice in its use in economic conflicts.

The UN Security Council has not adopted a Russian draft resolution on the non-deployment of weapons in outer space. Seven countries voted for the draft, including Russia and China, while Switzerland abstained. Russia's permanent representative to the UN, Vasily Nebenzia, said that the rejection of the resolution proves the intention of the United States to militarize outer space.

France has supported the International Criminal Court's request for the arrest of Israeli officials and Hamas leaders. The ICC's demand became known yesterday. Washington rejected this demand, and President Biden said he saw no signs of genocide in the Gaza Strip.

Russians are less likely to repay mortgages ahead of schedule. In the first quarter of 2024, 432.7 billion rubles were spent on early repayment of mortgages, which is the lowest in the last four years. The reason for this is the high key rate, because of which citizens prefer to leave their excess funds in the bank at a high interest rate.

China may increase duties on car imports

The Chinese authorities are preparing to increase duties on car imports amid escalating trade contradictions with Western countries.

The Chinese Chamber of Commerce in the European Union received information from insiders about Beijing's intention to raise duties on the import of cars with large engines.

«Such measures will have a significant impact on European and American automakers, especially in light of Washington's recent increase in duties on Chinese electric vehicles and Brussels' preparations to introduce measures as part of an anti-subsidy investigation into electric vehicles from China», – the chamber said.

Earlier, Liu Bin, chief expert of the China Automotive Technology & Research Center and deputy director of the China Automotive Strategy and Policy Research Center, who is involved in the development of China's automotive policy, noted that in the short term, duties on imports of sedans and SUVs with engines of more than 2.5 liters may be temporarily increased in order to reduce imports.

According to WTO rules, the duty can be increased up to 25%. In 2023, China imported about 250 thousand cars with engines of more than 2.5 liters, which accounted for 32% of all car imports.
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A new round of trade war – the EU intends to raise duties on cars from China

The European Union, following the United States, plans to increase duties on Chinese cars.

Last week, the United States significantly increased duties on some goods from China. It wasn't just cars that were hit. Tariffs for microchips were doubled to 50%, for batteries – from 7.5% to 25%, for solar panels – from zero to 25%. In turn, Europe is considering the possibility of imposing similar restrictions on Chinese goods.

The rapid development of affordable electric vehicle production in China is putting significant pressure on European brands. Due to the intensive supply of cars from China, they are postponing their plans to switch to electric vehicles, significantly lagging behind Chinese competitors in development.

Currently, the duty on Chinese cars in the EU is 10%. Analysts believe that it is necessary to increase this figure to at least 25%. Some experts believe that only tariffs above 55% will be able to change the situation.

India and Indonesia attract investors more than China

Analysts note the gradually growing contrast between India and Indonesia on the one hand and China on the other. The first two developing countries have a clear advantage over China due to the rapid population growth, especially among young people.

Experts note that stable population growth in these countries is becoming an increasingly important factor for investment decisions. They foresee a significant increase in infrastructure spending, which has a positive effect on the prospects of the economy. At the same time, China is facing rapid aging and population decline

In addition, India has the youngest population among major economies, which contributes to faster income growth. It is also worth noting that both India and Indonesia are holding national elections this year, which indicates the desire of these countries to become important economic centers.

All these factors create an optimistic mood among market investors, which leads to an increase in stock markets. For example, the Nifty index is already trading at historical highs and is expected to grow for the 9th year in a row, as well as the Jakarta composite index.

Structural reforms aimed at reducing bureaucracy and encouraging foreign investment are also yielding positive results. Robust structural reforms in India and Indonesia are contributing to the creation of sufficient jobs, which helps to take full advantage of the demographic boom.

The selection of a broker must be carefully considered, as brokers serve as the bridge that allows traders to engage in forex trading. That is why I chose to go with Tickmill, enabling me to trade comfortably and safely.

Modi's election victory will support the growth of the rupee

The Indian rupee has gained the status of one of the most stable currencies in Asia this year, mainly due to the significant inflow of foreign currency into bonds denominated in rupees.

This positive trend may continue due to expectations of the election of Prime Minister Narendra Modi to promote economic policies conducive to the growth of the Indian economy. Voting is expected on June 4 after the completion of multi-stage elections in India, which began in April.

The rupee is expecting a significant strengthening in May and may even become the best currency of the year. The rupee is projected to peak at 82 rupees per 1 dollar by the end of 2024. However, risks may arise, including strict currency controls by the Reserve Bank of India in order to ensure the stability of the rupee and protect the country's export competitiveness.

Modi's election victory is seen as a favorable factor for the rupee, given the prosperity of the economy during his previous reign.

Foreign investors have already invested approximately $6 billion in bonds denominated in rupees before including Indian sovereign bonds in the emerging markets index from JPMorgan Chase & Co. in June.
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