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Markets are pricing in a potential 25 basis-point rate cut by the Fed at its upcoming meeting, as recent US inflation came in softer than expected.
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A preliminary trade framework between the United States and China has boosted risk sentiment globally—both sides agreed to pause fresh tariff threats and delay China’s planned rare-earths export restrictions.
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Regional equity markets reacted positively: Japan’s stocks jumped over 2% and South Korea hit fresh highs, driven partly by large gains in major chip-makers.
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With rate-cut expectations rising, the US dollar may face downward pressure—potentially supporting non-USD currencies and USD-weak pairs.
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Improved US-China trade outlook can reduce safe-haven demand (e.g., USD or JPY), and may benefit risk-sensitive currencies like KRW, JPY, AUD or SGD.
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Traders should watch for the Fed’s guidance on the timing/size of cuts and any further trade-deal confirmations—both could trigger sharp currency moves.
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Fed meeting statement & dot-plot updates — will they commit to cuts, or stay cautious?
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Concrete milestones or agreements in US-China trade talks — a confirmed deal could reinvigorate risk-assets and weaken USD further.
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Tech/semiconductor strength in Korea/Japan may signal broader economic momentum in Asia, shifting forex flows toward Asian currencies.
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