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Traders are preparing for some big moves in foreign exchange later today, with the Federal Reserve Bank due to update the market on its latest rate call. The FOMC is fully expected to keep rates on hold, and any move today would result in huge moves in the dollar. However, the more likely scenario is that we see some strong moves on the back of the forward guidance that we get from the statement or from Jerome Powell in his press conference later in the day, with any more dovish indications likely to see further pressure on the dollar and any relatively hawkish (or really less dovish) calls likely to see the dollar rally back into recent ranges.

Cable traders will be watching the event even more closely than some, with the pair sitting near a key technical level that could see bigger moves if we see breaks. Cable topped out a few times just under 1.3450 at the end of April, and even though it is trading nearly a big figure below that level now, a dovish Fed—or certainly a surprise cut—could see that level challenged swiftly, with a break likely to bring the key 1.4000 psychological level into focus. A less dovish FOMC would see the dollar push higher and Cable drop back into recent ranges, with initial support likely around 1.3230, where it has based in the last couple of weeks.

Resistance 2: 1.4000 – Psychological Level
Resistance 1: 1.3444 – Trendline Resistance and 2025 High

Support 1: 1.3230 – 23 April Low
Support 2: 1.2851 – 200-Day Moving Average

The post Trade Cable on the FOMC Interest Rate Decision first appeared on IC Markets | Official Blog.

• US’ Bessent and Greer to meet with China rep on Economic Matters this week
• Bessent with juicy China trade talk details – we’ll decide what we are going to talk about
• China’ s Ministry of Commerce says is has “decided to agree to engage with the US”
• China confirms Vice Premier He Lifeng to talk trade with Bessent this week

S&P 500 futures are now up 0.6%, getting a shot in the arm from the headlines above. China then doubled down to bolster risk sentiment further in Asia trading, by delivering a host of supportive measures including a slew of rate cuts. Eamonn’s got the summary on that here before adding one more to the relending rate here.

For now, hope springs eternal. There is good chance for de-escalation but what does that really mean is a separate discussion. But market players are taking on a more optimistic side for the time being. Buy the rumour, as one would put it.

But as a reminder, the bar is set relatively low. At 145% tariffs currently, any step down to allow for some trade to be facilitated instead of no trade at all is an improvement. However, if we do move to 50-60% tariffs, it’s still a major hit to both economies. But at least, there are signs of trying to work something out I guess.

Come what may, the end goal is basically what markets have to really consider ultimately. If it is moving towards de-escalation and slow removal of tariffs or a much lower level, then sure there is something to be cheerful about.

But if the base case is for higher tariffs in general i.e. Trump hoodwinking the world into forcing tariffs on everyone, I think that’s a consequence towards the global economy that markets have yet to really price in. But for now, baby steps.

This article was written by Justin Low at www.forexlive.com.

US Markets Dip Ahead of Fed – Dow Down 1%

US stock markets dropped in trading yesterday ahead of the key Fed rate decision as investors digested more comments from President Trump on tariffs. The President advised that the US would be putting fair numbers down on tariffs, raising concerns that there would be less discussion with trade partners. All three of the major indices fell: the Dow dropped 0.95%, the S&P lost 0.77%, and the Nasdaq closed 0.87% down. Treasury yields dipped, the 2-year down 5 basis points to 3.783%, and the 10-year dropped 4.9 basis points to 4.294%. The dollar also lost ground against most of the majors, the DXY down 0.15% to 99.24. Oil prices jumped off multi-year lows on news of greater demand from Europe and China, Brent up 2.94% to $62.00, and WTI rose 3.43% to $59.09 a barrel. Gold drove higher again to threaten all-time highs ahead of the Fed, rising 2.34% to $3,430.02 an ounce.

Fed in Focus Today

The Federal Reserve Bank will make its latest interest rate decision today, with the market fully expecting them to keep rates on hold despite demands from the Oval Office to cut them. The market is currently pricing in a 98% chance of rates remaining on hold, but we are likely to see volatility around the accompanying statement and the later press conference on when the next cut will come. It is likely that the next meeting in June will be ‘live,’ with a chance of a cut coming then, currently pricing in around a 30% chance, with odds increasing to 60% for a July move. The message that we receive from Jerome Powell will be key later today, with any more dovish indications likely to see further pressure on the dollar, which is still sitting close to sensitive technical levels on most of the majors. If he remains relatively hawkish and stays with a ‘wait and see,’ data-watching approach, then we could see the dollar rally back into recent ranges.

Busy Day Ahead for Traders

Financial markets traders are preparing for another busy day ahead, with geopolitical updates still a major influence on markets ahead of the biggest fundamental update of them all – the Federal Reserve rate call. We have already seen key data in New Zealand early in the Asian session, with the unemployment rate dropping from 5.3% to 5.1%, helping to push the Kiwi back towards annual highs. There will be a focus on UK markets early in the European session with Construction PMI data (exp. 46.0) due out, but really the big market moves should come in the US session. The Federal Reserve Bank is due to make its latest rate call later in the day, along with its statement and the usual later press conference. However, some traders feel that comments from the Oval Office, both with regard to the Fed and/or other trade comments, could have a bigger impact on the market.

The post General Market Analysis – 07/05/25 first appeared on IC Markets | Official Blog.

This adds to the slew of rate cuts and other measures from earlier. In case you missed it, Eamonn’s got you covered here.

The relending facility is one that is mainly used to bolster the stock market, allowing for low-cost funding for specific purposes such as share buybacks and shareholding increases by firms.

This article was written by Justin Low at www.forexlive.com.

US/China trade talks to begin:

• US’ Bessent and Greer to meet with China rep on Economic Matters this week
• Bessent with juicy China trade talk details – we’ll decide what we are going to talk about
• China’ s Ministry of Commerce says is has “decided to agree to engage with the US”
• China confirms Vice Premier He Lifeng to talk trade with Bessent this week

PBOC rate cuts:

• PBOC/CSRC China supportive measures – in summary
• China unlocks more insurance capital for stocks, signals property support
• People’s Bank of China to cut Standing Lending Facility rate by 10bp
• China promises more local stock market support from sovereign fund
• China will help A-share listed companies affected by tariffs to cope with difficulties
• PBOC governor says will lower interest rates on structural policy tools by 25 bps
• People’s Bank of China sets 7-day reverse repo rate at 1.4% (from 1.5% previously)
• PBOC rate cuts: 7-day RR to 1.4% (from 1.5%), LPR 10bp cut also, RRR 50 bp cut
• PBOC sets USD/ CNY reference rate for today at 7.2005 (vs. estimate at 7.2124)
• PBOC Governor Pan says world is full of uncertainties – cuts rates
• Gold has been slammed lower, under US$3370

Other:

• Trump expected to announce the US will refer to the Persian Gulf as the “Arabian Gulf”
• Australia – Santos CEO says over 200 wells underwater due to floods in Cooper Basin
• Japan Jibun / S&P Global Services PMI for April 52.4 (flash was 52.2, prior 50.0)
• US may deport people to Libya
• New Hampshire governor signs crypto reserve bill into law
• ICYMI: US-UK trade talks make some progress on steel, autos, but deal timing still unclear
• WSJ reports “U.S. Orders Intelligence Agencies to Step Up Spying on Greenland”
• New Zealand employment report, Unemployment rate 5.1% vs. 5.3% expected
• Japanese media reports that Fujifilm will build a semiconductor materials factory in India
• 58 wallets made over $10 million each from Trump’s meme coin vs. 764,000 wallets that lost
• RBNZ says risks to the financial system have increased over the past six months

India/Pakistan conflict:

• Reports on intense shelling between Indian and Pakistani troops at 3 frontier locations
• India Launches Missile Strikes on Alleged Terror Camps in Pakistan

Other

• Forexlive Americas FX news wrap: US dollar slumps as trade deals remain stuck
• Oil: private survey of inventory shows headline crude oil draw larger than expected
• S&P closes lower for the second consecutive day
• Trade ideas thread – Wednesday, 7 May, insightful charts, technical analysis, ideas

It was an eventful day in Asia today with two nuclear powers
exchanging fire, a beginning to US/China talks scheduled, and rate
cuts/further supportive measures from the People’s Bank of China
and other Chinese authorities.

FX rates swing
around in response, as did gold and equities.

• India-Pakistan
  tensions escalate after cross-border strikes. India and Pakistan are both nuclear powers.

  India carried
  out strikes on nine sites in Pakistan and Pakistan-administered
  Kashmir early Wednesday, describing the taregts as “terrorist
  infrastructure” used to plan and direct attacks. Indian authorities
  stressed the operation was “focused, measured, and non-escalatory,”
  adding that no Pakistani military assets were hit.

• Pakistan responded
  with artillery, resulting in both sides exchanging heavy fire along
  the Line of Control that separates Pakistan-administered Kashmir from
  Indian-administered Kashmir
• India’s strikes follow
  weeks of intensifying hostilities after a deadly assault in the town
  of Pahalgam on April 22, where 26 civilians — mostly Hindu men —
  were killed by militants. It was the worst attack on civilians in the
  region in 20 years.

U.S. and China to
(finally) begin high-level trade talks

• The United States
  and China will hold formal trade negotiations this weekend in Geneva,
  their first high-level engagement since the eruption of a fresh
  tariff-driven trade conflict. China’s Ministry of Commerce
  confirmed Vice Premier He Lifeng will meet with U.S. Treasury
  Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer,
  in what both sides are framing as a critical effort to de-escalate
  tensions.

• Treasury Secretary Bessent said the talks aim to
  address “shared interests” and called current tariff levels
  “unsustainable,” while rejecting the notion of decoupling. “What
  we want is fair trade,” he said, noting that the world has been
  engaging with the U.S., but “China has been the missing piece.”
  The USTR added that Greer will engage directly with his Chinese
  counterpart to discuss paths forward on trade.
• China, for
  its part, said it agreed to the meeting after “repeated” outreach
  from Washington and following consultations with its domestic
  stakeholders. The Commerce Ministry emphasised that the talks must be
  conducted on equal footing and warned it would not tolerate coercion
  or double-dealing. The ministry also expressed concern that other
  nations in ongoing trade discussions with the U.S. might coordinate
  tariff measures against China, adding a strategic layer to Beijing’s
  decision to engage.

• Bessent tempered
  expectations, saying that the two sides have agreed to talk. The plan
  is that on Saturday and Sunday, we’ll agree on what we’re going
  to talk about. Bessent added that this initial meeting will be about
  de-escalation.

People’s Bank of China rate cuts

• Then it was over to China, where a joint briefing by officials from the
  People’s Bank of China, the National Financial Regulatory
  Administration and the China Securities Regulatory Commission. The
  officials included PBOC Governor Pan.

I
posted a bit of a summary of the measures, repeating that here, but
there is more detail in the posts above.

Equity
Market Stabilisation:

• Central
  Huijin, along with the PBOC, will step in as a quasi-stabilisation
  fund to help maintain stock market confidence.

• An
  additional 60 billion yuan (US$8.3 billion) from long-term insurance
  funds will be channelled into equities under an expanded pilot
  program.

Targeted
Liquidity and Credit Support:

• RMB
  300 billion in new re-lending funds will be allocated to support
  technological innovation and industrial upgrades.

• A
  new RMB 500 billion re-lending facility will be introduced to
  finance elderly care infrastructure and broader service consumption.

• The
  People’s Bank of China (PBOC) will expand the quota for capital
  market support tools to RMB 800 billion to deepen market-based
  financing.

• A
  new risk-sharing mechanism will be established to back technology
  innovation bonds, improving credit support for strategic sectors.

Monetary
Tools and Interest Rate Adjustments from the People’s Bank of China:

• The
  Reserve Requirement Ratio (RRR) will be lowered by 0.5 percentage
  points to boost banking system liquidity.

• A
  temporary cut in the reserve ratio for auto finance and leasing
  firms will bring it down from 5% to 0%, aiming to ease
  sector-specific funding constraints.

• The
  7-day Reverse Repo rate, a key short-term policy rate, will be
  trimmed by 10 basis points to 1.4%.

• The
  structural monetary policy rate will be reduced by 25 basis points
  to support targeted credit expansion.

• Interest
  rates on individual housing provident fund loans will be lowered by
  0.25 percentage points to reduce mortgage borrowing costs.

• The
  Standing Lending Facility (SLF) rate will be cut by 10 basis points,
  further easing interbank lending conditions.

—

Gold
continued its Tuesday swing higher, getting to above US$3430. It
wobbled around that level and down just a touch on the news of the
India/Pakistan fighting. When news subsequently broke of the
Bessent/Greer/He meeting ahead gold sold of heavily to lows circa
US$3360 before stabilising.

Major
FX was a little less wild. The USD broadly gained on the trade talk
meeting news. AUD/USD was an exception, the Australian dollar found
bids on China hopes. After topping above 0.6510 its subsided back
below 0.6490 though.

USD/JPY is 100 points higher on the trade talk news.

US
equity index futures rose on the trade talk news, these have
stabilised off their early highs.

This article was written by Eamonn Sheridan at www.forexlive.com.

China will allow an additional 60 billion yuan (US$8.3 billion) from long-term insurance funds to be invested in equities as part of an expanded pilot program aimed at deepening capital market participation. The move is part of Beijing’s broader efforts to shore up financial stability and revive confidence across key sectors.

Li Yunze, head of China’s top financial regulator, announced the measure at a press briefing, adding that authorities are also preparing new initiatives to stabilise the country’s troubled property sector.

The expanded insurance investment scheme is a key pillar of ongoing capital market reforms. Together with anticipated property measures, it reflects a wider policy shift to support economic resilience amid persistent growth and market pressures.

Earlier:

• PBOC Governor Pan says world is full of uncertainties – cuts rates
• PBOC rate cuts: 7-day RR to 1.4% (from 1.5%), LPR 10bp cut also, RRR 50 bp cut
• People’s Bank of China sets 7-day reverse repo rate at 1.4% (from 1.5% previously)

• PBOC governor says will lower interest rates on structural policy tools by 25 bps

• People’s Bank of China to cut Standing Lending Facility rate by 10bp

More:

• China will help A-share listed companies affected by tariffs to cope with difficulties
• China promises more local stock market support from sovereign fund

This article was written by Eamonn Sheridan at www.forexlive.com.

China Securities Regulatory Commission (CSRC) head:

• To support Central Huijin to bolster markets.
• Central Huijin, PBOC acting as quasi-stabilization fund.
• China will roll out reform measures for tech boards.
• Ample preparations made for dealing with external shocks.
• Will forcefully promote long-term capital into the stock market.
• Confident to achieve stable development of China’s stock market.

**

Shanghai Composite update:

This article was written by Eamonn Sheridan at www.forexlive.com.

China securities regulator head:

• Says US tariffs will have bigger impact on A-share listed companies with bigger share of exports to US

• Will help a-share listed companies affected by tariffs to cope with difficulties

• Says will support mergers and acquisitions among listed companies

Earlier:

• PBOC Governor Pan says world is full of uncertainties – cuts rates
• PBOC rate cuts: 7-day RR to 1.4% (from 1.5%), LPR 10bp cut also, RRR 50 bp cut
• People’s Bank of China sets 7-day reverse repo rate at 1.4% (from 1.5% previously)

• PBOC governor says will lower interest rates on structural policy tools by 25 bps

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump is expected to announce during his upcoming visit to Saudi Arabia that the United States will begin referring to the Persian Gulf as the “Arabian Gulf” or “Gulf of Arabia,” according to two U.S. officials who spoke to the Associated Press on condition of anonymity.

• The move aligns with longstanding demands from Arab nations seeking to change the name of the waterway that borders southern Iran — a country that insists on its historical designation.
• The White House and National Security Council have not yet commented on the reported plan.

This article was written by Eamonn Sheridan at www.forexlive.com.

Australia – Santos CEO says over 200 wells underwater due to floods in Cooper Basin, production is down 15%

This article was written by Eamonn Sheridan at www.forexlive.com.

Gold wobbled near its high on the news of India’s attack on terrorist sites in Pakistan:

• India Launches Missile Strikes on Alleged Terror Camps in Pakistan

But it dropped hard after the US/China trade talks news broker:

• “Sources” say US’ Bessent and Greer to meet with China rep on Economic Matters this week

Its down around 2% on the session:

This article was written by Eamonn Sheridan at www.forexlive.com.

Japan Jibun / S&P Global Services PMI for April 52.4

• flash was 52.2, prior 50.0

Composite PMI 51.2

• prior 51.1

Annabel Fiddes, Associate Director at S&P Global Market
Intelligence, comments in the report on the latest Japan PMI survey:

• Japan’s private sector returned to expansion in April, driven solely by a rebound in services activity.

• Services saw a notable improvement in demand, while manufacturing contracted more sharply amid U.S. tariff headwinds.

• Overall output growth remains subdued, with services carrying the momentum for five of the past six months.

• Business confidence declined across both sectors, reflecting concerns over global economic conditions and tariff-related risks.

• Input price inflation hit a two-year high in April, prompting firms to raise prices to protect margins.

—

Last week we had the JIbun PMI Manufacturing April 2025 Final come in at 48.7

• prior 48.4, preliminary 48.5

This article was written by Eamonn Sheridan at www.forexlive.com.