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market analysis
A collection of positive and negative news that affects the foreign exchange market
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Hello everyone, today XM Foreign Exchange will bring you "【XM Foreign Exchange Decision Analysis】: Collection of positive and negative news that affects the foreign exchange market". Hope it will be helpful to you! The original content is as follows:
In the foreign exchange market, all kinds of news are like the wind, always swaying the trend of the currency. On August 25, 2025, a series of major news intertwined, bringing many thoughts and challenges to market participants. The following will sort out the positive and negative news that affects the foreign exchange market on that day.
1. Fed policy expectations turn - major positives drive the market
Feder Chairman Powell sent a dovish signal at the Jackson Hall meeting, becoming a "blockbuster" in the foreign exchange market. His speech implies that a policy stance adjustment may be "imminent", and the market's probability of a rate cut in September instantly soaring to 90%. This shift in expectations caused the dollar to suffer a sharp drop, with the dollar plunging by more than 1.3% from the day-high on Friday, marking its biggest single-day decline since April. Other currencies, such as the euro and pound, have ushered in an opportunity to rise. From historical experience, when the Fed releases a signal of interest rate cuts, the dollar usually weakens and funds flow to other currency markets for higher returns. For example, in the past similar policy shifts, the euro-USD exchange rate often showed a significant increase, and the market is likely to continue this trend. For investors, this means that in foreign exchange trading, long positions in non-US currencies can be appropriately increased to grasp the dividends brought by this policy shift.
2. Geopolitical tensions - changing risk appetite affects foreign exchange markets
The situation in the Middle East continues to be tense, and the conflict between Israel and Lebanon has intensified. The rise in geopolitical risks has changed the market risk preferences. With increasing uncertainty, investors tend to seek safe-haven assets, such as the US dollar and the Japanese yen, traditional safe-haven currencies, are often favored. However, this time the situation is more xmhouses.complicated, althoughPolitical tensions, but the dollar weakened due to expectations of a Fed rate cut, which somewhat undermined its attractiveness as a safe-haven asset. Although the yen exchange rate against the US dollar fluctuated, there was no significant unilateral increase. However, once the situation in the Middle East further deteriorates and market panic heats up sharply, safe-haven currencies such as the Japanese yen may still appreciate significantly. Investors need to pay close attention to the latest progress in the geopolitical situation, adjust their foreign exchange investment portfolio at any time, and prevent potential risks.
3. Uncertainty in trade policy - affecting the trend of related currency
In terms of US trade policy, the US trade negotiating delegation's visit to New Delhi from August 25 to 29 has been cancelled. Reuters analyzed that this further shattered the hope that the US may lower or delay the tariff on India may be reduced. Previously, US President Trump signed an executive order to impose an additional 25% tariff on Indian products imported to the United States. At present, the overall tariff rate on India has reached 50%. This series of trade policy changes have had an impact on both the US dollar and the Indian rupee. From the perspective of the US dollar, the continued trade frictions are not conducive to the stability of the US economy, and thus puts certain pressure on the US dollar. The Indian rupee is facing pressure to depreciate due to tariff shocks and unclear trade prospects. In foreign exchange trading, investors involving the US dollar against the Indian Rupee need to operate with caution and pay close attention to the subsequent direction of trade policies, as any new policy changes may trigger large fluctuations in the exchange rate.
4. Central Bank's monetary policy dynamics - liquidity is closely related to exchange rate
The People's Bank of China launched a 600 billion yuan MLF operation on August 25, with a term of one year. This move aims to hedge the maturity of 2.7 trillion yuan reverse repurchase next week and maintain liquidity. From the perspective of the foreign exchange market, the central bank's monetary policy operations will affect the money supply and market interest rates, which will indirectly affect the exchange rate. When the central bank increases liquidity supply, if the market expects that the country's money supply will increase significantly, it may trigger expectations of currency depreciation. However, the operation of the People's Bank of China is mainly to maintain a reasonable level of liquidity and stabilize market expectations. Against the backdrop of large fluctuations in the global economy and foreign exchange markets, it will help stabilize the RMB exchange rate. In addition, the Bank of Japan adjusted its YCC policy to relax the volatility range of the 10-year Treasury bond yield to ±0.5%, which brought the yen to 149.5 against the US dollar. The Bank of Japan's policy adjustments have changed the interest rate environment of the yen, which has had a direct impact on the yen exchange rate, and has also intensified the fluctuations in the yen-related currency pairs in the foreign exchange market. When trading currency pairs involving the Japanese yen and RMB, investors need to fully consider the changes in the monetary policies of the central banks of the two countries and their impact.
Overall, on August 25, 2025, the foreign exchange market was affected by a xmhouses.comprehensive impact of multiple news. The shift in Fed policy expectations is the main driving factor in the current market, and geopolitics, trade policies and central bank monetary policy dynamics are also continuing to play a role. Investors need to xmhouses.comprehensively analyze these positive and negative news, pay close attention to market trends, and make investment decisions with caution.
Above contentIt is all about "【XM Foreign Exchange Decision Analysis】: Collection of Positive and Negative News that Influence the Foreign Exchange Market". It was carefully xmhouses.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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