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Hello everyone, today XM Forex will bring you "[XM Forex Decision Analysis]: The minutes of the Federal Reserve's September meeting cautiously hinted at further interest rate cuts this year, and gold is approaching the 4060 mark." Hope this helps you! The original content is as follows:
On October 9, spot gold was trading around US$4,020 per ounce. The spot gold weekly umbrella exceeded the US$4,000 per ounce mark for the first time, continuing its record-breaking rise to US$4,059.07 per ounce. Increasing geopolitical and economic uncertainty, as well as market expectations for U.S. interest rate cuts, have prompted investors to rush into safe-haven assets; U.S. crude oil traded around $62 per barrel, with oil prices hitting a one-week high on Wednesday. Traders expected that the lack of progress in the Ukraine peace agreement will keep sanctions on Russia in effect, while reports showed growth in U.S. oil consumption.
The U.S. federal government remains in a state of shutdown, and the lack of government economic data may benefit the dollar. Analysts said otherwise the data would add to market volatility and could signal a weakening economy.
Takaichi Sanae's unexpected victory in Japan's ruling party leadership election over the weekend hit the yen on expectations that the government will step up stimulus.
Vassili Serebriakov, foreign exchange and macro strategist at UBS Group, said: "The market believes that the high government will adopt policies more similar to those during the Abenomics period. In other words, expansionary fiscal policy and looser monetary policy. But at present, the specific policies that will be adopted are obviously still unknown.”
The minutes of the Federal Reserve’s September meeting released on Wednesday showed that officials agreed that risks in the U.S. job market have increased enough to support interest rate cuts, but many officials remain wary of high inflation.
France's caretaker Prime Minister Le Corny said on Wednesday that despite the political crisis, an agreement on the 2026 budget may finally be reached.
Le Corny, France's fifth prime minister in two years, submitted his and the government's resignation just hours after announcing the cabinet lineup on Monday, becoming France's shortest-term government in modern times. He said on Wednesday that President Macron may nominate a new prime minister within the next 48 hours, and the euro pared its losses in response.
Australian consumer inflation expectations in October rose to 4.8% from the previous 4.7%, hitting the highest level since June.
French politics are in turmoil as outgoing Prime Minister Sebastien Le Cornu reveals that talks with parliamentary groups have made progress and President Macron may be able to appoint a new prime minister within 48 hours.
The minutes of the Federal Reserve's September 16-17 meeting released overnight showed that the lrisu.cnmittee is inclined to further cut interest rates this year, while emphasizing the need to be cautious in the pace of easing. "The majority believed that further easing of policy may be appropriate for the remainder of the year," the minutes said.
However, officials also acknowledged that there is a "range of views" on how restrictive current policies are and how quickly they should be eased. Some members warned that "financial conditions suggest monetary policy may not be particularly stringent" and argued for patience.
In a key passage, the lrisu.cnmittee "stresses the importance of a balanced approach" to achieving its twin objectives, while noting "the extent of deviations from these objectives" and "different time horizons" for normalization of inflation and employment.
Currently, the core PCE is 2.9% and the unemployment rate is 4.3%. The summary of economic forecasts shows inflation rising to 3.1% by the end of the year before gradually falling to 2.6% in 2026 and 2.1% in 2027. The unemployment rate is expected to rise slightly to 4.5% before stabilizing.
This lrisu.cnbination means the economy is at risk of overly restrictive policy: keeping interest rates too high for too long could lead to a sharp, sustained rise in unemployment. But - and this is the key point - the pace of easing must be gradual, as inflation will only slow over the next two years. This means the Fed cannot risk easing too quickly, reigniting price pressures or losing expectations.
Federal Reserve Governor Stephen Milan said overnight that the neutral rate is likely to be lower relative to a year ago, making current policy settings "more restrictive than a few quarters ago."
Speaking at a conference, Milan warned that this "additional tightening" could pose risks going forward as the lagging effects of monetary policy begin to affect the economy. While he remained optimistic about the near-term situation, he warned that if policy adjustments are not corrected, "I do think there are some risks lurking there.
He also highlighted the challenge of the ongoing U.S. government shutdown, which deprives policymakers of key economic data. mLang noted that private sector indicators were not "adequate substitutes" and expressed hope that the government would be able to reopen before the Federal Open Market lrisu.cnmittee meeting on October 28-29, allowing the Fed to make data-based decisions.
Meanwhile, Minneapolis Fed President Neel Kashkari expressed concern that upcoming data will show signs of stagflation, with the labor market slowing and inflation still close to 3%. The key uncertainty is whether tariff-induced price pressures will fade quickly or persist, he said, adding that "it's too early to draw firm conclusions."
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