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The Bank of England may cut interest rates this week, Trump's 10-day deadline for Russia will expire
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Hello everyone, today XM Foreign Exchange will bring you "[XM Group]: The Bank of England may cut interest rates this week, and Trump's 10-day deadline for Russia will expire." Hope it will be helpful to you! The original content is as follows:
XM Forecast: The importance of economic data to be released this week from high to low is: Bank of England interest rate resolution, Canadian employment, and EIA crude oil inventories. Next, we will interpret it one by one.
▲XM chart
This Thursday at 19:00, the Bank of England will announce the results of the August interest rate resolution. Mainstream expectations believe that it will cut interest rates by 25 basis points, and the benchmark interest rate will drop from 4.25% to 4%. Since the beginning of this year, the Bank of England's monetary policy has followed the law of "interval interest rate cuts", that is, after the last resolution to cut interest rates, this resolution will be suspended, and the next resolution will be cut again. In February this year, the Bank of England decided to cut interest rates by 25 basis points, in March, and in May, it decided to cut interest rates by 25 basis points, and in June, it continued to hold on. Therefore, this month's resolution is likely to follow the rules of rate cuts of 25 basis points. In terms of economic data, the UK's unemployment rate data continues to rise, with the latest value in May at 4.7%, approaching the 5% full employment standard. The Bank of England governor is most worried about unemployment data, and he mentioned in his previous speech: "I do see some potential weakness, especially in the labor market, which is weakening." To cope with the weak labor market problems, it is necessary for the Bank of England to maintain loose monetary policy, which will continue to be negative for the pound.
▲XM chart
Canada will release a series of labor market data at 20:30 this Friday.Among them, the most popular one is the number of jobs in Canada in July, with the previous value of 83,100, and the expected value is only 13,500, which is very pessimistic. If the final published value is indeed much lower than the previous value, the Canadian dollar will suffer a significant impact. Canada's July unemployment rate is another highly-watched data, with the previous value of 6.9%, an expected value of 7%, and a slightly higher than 0.1 percentage point. 5% is a recognized standard for health unemployment, and Canada has been above this level for three consecutive years. Since June 2024, the Bank of Canada has intensively cut interest rates to boost the labor market, with 7 consecutive interest rates cuts, with a cumulative amplitude of 225 basis points, far exceeding the central banks of other developed economies. ·However, the Bank of Canada has remained silent in the last three periods of interest rate resolutions, mainly because the trade agreement with the United States has not yet been signed and dared not act rashly. If Canadian employment drops sharply as expected in July, the Bank of Canada's interest rate cuts will surely heat up and the Canadian dollar will suffer a significant impact.
▲XM chart
At 22:30 this Wednesday, the US EIA will release the EIA crude oil inventories data until August 1, with the previous value increasing by 7.698 million barrels. In this way, the latest value continues to increase, and the US crude oil price will suffer a significant suppression. Since EIA crude oil inventory data are released every week and have a high frequency, the impact on oil prices is average. The crude oil market will be sensitive to the results of EIA data unless there are continuous increases or interest rate cuts for several consecutive weeks, and there will be major changes in the supply and demand side of crude oil. This week, US President Trump said last week that he would give Russia 10 days to end the issue with Ukraine. According to time calculations, this Thursday to Friday is what Trump calls the deadline. If the two sides fail to reach an agreement, the United States may sanction Russia's oil exports, which will impact the international crude oil supply side, and there is a possibility of a sharp rise in international oil prices. Therefore, this week's EIA crude oil inventory data needs to be closely watched, which may have a far greater impact on international oil prices than usual.
XM risk warning, disclaimer, special statement: The market is risky, so be cautious when investing. The above content only represents the analyst's personal views and does not constitute any operational suggestions. Please do not regard this report as the sole reference. At different times, analysts' views may change and updates will not be notified separately.
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