Intense debate on the US-Malaysia trade agreement, analysis of short-term trend of spot gold, silver, crude oil and foreign exchange on October 27

Global market overview

1. European and American market conditions

The three major U.S. stock index futures all rose, with the Dow futures rising 0.51%, the S&P 500 futures rising 0.82%, and the Nasdaq futures rising 1.25%. Germany's DAX index fell 0.05%, Britain's FTSE 100 index rose 0.14%, France's CAC 40 index fell 0.15%, and Europe's Stoxx 50 index rose 0.26%.

2. Interpretation of market news

Intense debate over the U.S.-Malaysia trade agreement, supply chain gaming under 19% tariff

⑴ U.S. Ambassador to Malaysia Kagan denied that the newly signed reciprocal trade agreement has "unbalanced" provisions, emphasizing that it will enhance investor confidence. ⑵The agreement aims to resolve the trade imbalance between the two countries and is expected to promote the growth of U.S. investment in Malaysia and expand Malaysian market access. ⑶Despite facing tariff barriers, Malaysia's exports to the United States have still achieved growth this year, and the tariff rate has been negotiated from 25% in July to the current 19%. ⑷Specific www.xmhouses.commodities are eligible for tariff exemptions, including key export categories such as palm oil and semiconductors. ⑸As Malaysia’s largest export destination, the United States’ western supply chain integration strategy has brought continuous investment inflows to Malaysia.

The Russian State Duma calls on the U.S. government to abandon confrontation and engage in dialogue with Cuba

Members of the Russian State Duma call on the U.S. government to abandon confrontation and engage in equal dialogue with Cuba. On Monday, a draft appeal to the United Nations General Assembly, member state parliaments and international parliamentary organizations was submitted to the Russian State Duma calling for an end to the economic, trade and financial embargo against the Republic of Cuba. The document states: “IWe call on the U.S. government to abandon its confrontational stance and engage in equal and mutually respectful dialogue with the Republic of Cuba. We firmly believe that the normalization of relations between Washington and Havana is in the long-term interests of the two peoples and will also help strengthen stability in the entire Caribbean region. ”

The oil market confusion under the sanctions storm: supply panic and historical paradox

⑴ Washington’s new sanctions on major Russian oil www.xmhouses.companies triggered a surge in oil prices, but the actual export impact may be lower than market expectations. ⑵ Morgan Stanley data shows that this year’s average daily crude oil exports of Rosneft and Lukoil total about 3 100,000 barrels. ⑶The three core buyers of Russian crude oil maintain stable export channels. ⑷Historical experience shows that the impact of supply concerns caused by sanctions is usually less than the initial market reaction. ⑸Traders will need the next few weeks to clearly assess the true impact of the sanctions on the global oil market.

Data vacuum raids. Market, manufacturing survey becomes the only weather vane

⑴ The U.S. government shutdown caused the release of durable goods order data to be delayed, and the market lost reference for important economic indicators. ⑵The Dallas Fed's Texas Manufacturing Outlook Survey became the only key data on Monday, with the previous activity index at -8.7. ⑶The consensus is that durable goods orders will increase by 0.5% in September, and the growth in Boeing orders indicates that the civil aircraft category will significantly improve. ⑷The Ministry of Finance will auction US$30.2 billion in treasury bonds, including US$13.9 billion in short-term bills and US$16.3 billion in 2-year/5-year treasury bonds. ⑸ Regional manufacturing surveys performed divergently this month, with the preliminary S&P global manufacturing PMI rising slightly by 0.2 to 52.2, providing limited guidance. ⑹ Orders other than transportation equipment The single economy showed a solid trend, growing by 0.4% last month, but the August data was not revised due to the government shutdown.

The US$10.9 billion pump was shocking, and the overnight interest rate exceeded the upper limit of the corridor

⑴The overnight financing rate jumped 6 basis points to 4.33% at the opening of Monday, and the three settlement pumps this week totaled US$10.9 billion, triggering upward pressure. ⑵ At the end of the month, the single-day withdrawal amount reached US$5.8 billion, and the overnight collateral interest rate was already trading at 4.38% in advance, showing that there is real anxiety in the market. ⑶The current interest rate exceeds the upper limit of the policy corridor of 4.00%-4.25% by 8 basis points, and the Federal Reserve's reverse repurchase tool may be used. ⑷The 5-year and 20-year repo rates are 45% lower than the interest rate respectively and 15 basis points, the yield curve showed a partial inversion. ⑸The probability of federal funds futures pricing of a 25 basis point interest rate cut at the October and December meetings is 97% and 94% respectively, and the market has fully shifted to loose expectations. ⑹ The three-month overnight index swap reported at 3.737%, 47.3 basis points lower than the 10-day average overnight financing rate, indicating that interest rates will be cut at least once in the next three months.

The currency dilemma behind Brazil’s cooling inflation

⑴ A survey by the Brazilian Central Bank shows that economists have lowered their expectations for the IPCA inflation index in 2025 from 4.70% to 4.56%, and in 2026 from 4.27% to 4.20%. ⑵Interest rate expectations remain stable,The SELIC interest rate will remain unchanged at 15.00% at the end of 2025 and 12.25% at the end of 2026. ⑶ The economic growth forecast is slightly revised down, with the GDP growth rate slightly adjusted from 2.17% to 2.16% in 2025 and from 1.80% to 1.78% in 2026. ⑷Exchange rate expectations show a slight strengthening of the real, with the exchange rate expected to improve from 5.45 to 5.41 at the end of 2025 and remain unchanged at 5.50 at the end of 2026. ⑸ Under the dual pressure of inflation and interest rates, the Brazilian economy is facing a protracted game of weakening growth momentum and a tightening monetary policy cycle.

The US banking industry has launched another wave of mergers and acquisitions, with Huntington Bank integrating Cadence Bank for US$7.4 billion

⑴ Huntington Bank, a regional US lender, has agreed to acquire smaller rival Cadence Bank in an all-stock transaction, with a total transaction value of US$7.4 billion. ⑵ This transaction values ​​Cadence Bank at US$39.77 per share and will form one of the top ten largest banks in the United States with total assets of US$276 billion and deposits of US$220 billion. ⑶The pace of mergers and acquisitions in the U.S. banking industry will accelerate significantly in 2025, and financial institutions are actively seeking efficiency improvements and operational stability amid a loosening regulatory environment. ⑷ Mid-sized banks are expanding their scale through mergers to enhance their market www.xmhouses.competitiveness with large Wall Street banks. ⑸The merger news pushed Cadence Bank's stock price up 5% in pre-market trading.

The outlook for the British retail industry continues to deteriorate, and November sales are expected to decline further

⑴ British retailers continue to be under pressure in the autumn, and the sales outlook for November is expected to further deteriorate. ⑵The sales forecast indicator for the next month dropped from minus 36 to minus 39. ⑶ The Confederation of British Industry pointed out that weak consumer confidence continues to suppress market sentiment, and all parties are cautious about the upcoming budget.

The growth rate of household loans in the euro zone hit a two-and-a-half-year high in September

⑴ Household loans in the euro zone increased by 2.6% year-on-year in September, in line with expectations and the highest growth rate since March 2023. ⑵ Loan growth continues to reflect the continued recovery in credit demand, mainly supported by the European Central Bank's recent policy easing. ⑶Corporate loans increased by 2.9%, slightly lower than the 3% increase in August. ⑷The overall credit of the private sector increased by 2.8%, which was the same as the previous month.

Germany’s business confidence index rebounded more than expected in October

⑴ Germany’s Ifo business climate index rose to 88.4 in October, higher than September’s 87.7 and the market expectation of 88. ⑵The expectations index rose to 91.6, the highest level since February 2022, from the previous value of 89.7; the current situation index fell to 85.3 from the previous value of 85.7. ⑶Ifo Chairman Clemens Foster said: "Businesses still have hope for economic recovery next year, but their assessment of current business conditions has deteriorated slightly." ⑷Manufacturing expectations have improved, but business satisfaction with current operating conditions is still low. ⑸ The rebound in confidence in the service industry stems from an improved assessment of the current situation and an alleviation of doubts about the future. ⑹Business confidence in the retail industry has increased as expectations have become less pessimistic, although the current situation assessment is slightly worse than beforeExpect. ⑺Confidence in the construction industry weakened slightly, with the index showing a moderate decline.

The internal circulation of the EU economy has strengthened, and the proportion of local production has rebounded to 91.5% in 2023

⑴The EU's total domestic production will reach 33.715 trillion euros in 2023, accounting for 91.5% of the total supply of goods and services, an increase of 1.2 percentage points from 2022. ⑵Import volume dropped to 3.147 trillion euros, accounting for 8.5%, a decrease of 330 billion euros www.xmhouses.compared with 2022. ⑶The industrial products field has the highest import dependence, reaching 15.4%, with an import value of 1.829 trillion euros corresponding to a local output value of 10.034 trillion euros. ⑷ Nearly half (48.1%) of the supplied products are used for intermediate consumption, final consumption accounts for 32.1%, and exports and capital formation each account for about 10%. ⑸The trade surplus will expand from 228 billion euros in 2022 to 542 billion euros, mainly due to a decline in imports while exports will only decrease by 16 billion euros. ⑹ The strong growth of local production has driven the total added value to increase by 1.048 trillion euros, reaching a total of 15.545 trillion euros in 2023. ⑺Data shows that energy price fluctuations are a key factor affecting the proportion of imports, and the structure has returned to the pre-energy crisis level in 2023.

3. Trends of major currency pairs before the New York market opens

EUR/USD: As of 20:23 Beijing time, EUR/USD rose and is now at 1.1646, an increase of 0.15%. Prices (EUR/USD) rose in the last trading session before the New York session, trying to break the key resistance of 1.1630 while trying to surpass the negative pressure on the EMA50, increasing the importance of this level, taking advantage of the short-term bullish corrective trend and trading along the trend line, with the relative strength indicator showing positive signals.

GBP/USD: As of 20:23 Beijing time, GBP/USD has risen and is now at 1.3348, an increase of 0.26%. Before the New York market opened, in the previous trading day, the (GBPUSD) price rose slightly, but the main bearish trend in the short term is still dominant, and its trading is running along the support trend line of this trend. As the price is below EMA50, negative pressure continues, reducing the possibility of the currency pair recovering in the short term. Additionally, negative signals emerged from the relative strength indicator, adding to the downward pressure surrounding the price.

Spot gold: As of 20:23 Beijing time, spot gold fell, now trading at 4034.51, a decrease of 1.90%. Before the New York market opened, during the previous trading day, (gold) prices fell and were close to falling below the key support level of $4,050. In the short term, they were dominated by bearish corrections and were affected by the breakout of the main upward trend line, as it traded below the EMA50, negative pressure continues to build, which reduces the likelihood of a near-term price recovery, especially if the RSI shows negative signals.

Spot silver: As of 20:23 Beijing time, spot silver fell, now trading at 47.560, a decrease of 2.10%. Before the New York market opened, (silver) prices fell in the latest intraday trading. After emerging from oversold conditions, the relative strength indicator showed a negative signal, paving the way for further declines during the day. At the same time, the downward pressure brought by the continued trading of prices below EMA50 strengthened the stability of the short-term bear market correction trend.

Crude oil market: As of 20:23 Beijing time, U.S. oil fell, currently trading at 61.320, a decrease of 0.31%. Before the New York market opened, (crude oil) prices fell on the last trading day as the stubborn resistance level stabilized at $61.75, trying to gain bullish momentum that may help break through this resistance. The bullish correction wave dominated in the short term and continued to trade above the EMA50, strengthening the chances of price recovery in the www.xmhouses.coming period. In particular, the relative strength indicator reached oversold levels and was exaggerated www.xmhouses.compared to the price action, indicating the beginning of a bullish divergence.

4. Institutional view

Barclays: The Bank of Thailand meeting minutes show that actual evidence of deterioration in economic growth is needed before interest rate cuts

Barclays Bank economists pointed out in a report that the minutes of the Bank of Thailand’s latest Monetary Policy www.xmhouses.committee meeting indicate that policymakers currently believe that if further interest rate cuts are to be implemented in the near future, actual evidence of deterioration in economic growth must first be seen. The central bank's minutes also showed it was beginning to focus on the risk of deflation - a subject that had not been mentioned in recent policy meetings. Barclays said this meant someone on the Monetary Policy www.xmhouses.committee (MPC), likely a new member, raised the issue. Barclays further added: "We believe that at least one of the two Monetary Policy www.xmhouses.committee members who voted for a rate cut at the October meeting advocated further easing on the grounds of deflation."

ING: U.S. Treasury yields in the long run The rate is expected to rise in the short term and is temporarily stable due to the impact of inflation data

ING strategists said in a report that as the inflation rate continues to be high, U.S. Treasury yields are expected to rise in the long term. They noted that while Friday's inflation data was lower than expected, the data "still indicated that the current economy's inflation rate is at 3%."level, and the Fed is about to implement further easing policy." ING said that its more structural (i.e., long-term) expectation is that the U.S. Treasury yield curve will steepen and overall interest rates will rise. However, given the mild inflation data released last week, they do not expect short-term U.S. Treasury yields to rise.

The above is about "[XM Foreign Exchange Market www.xmhouses.commentary]: U.S.-Malaysia Trade Agreement The entire content of "Short-term Trend Analysis of Spot Gold, Silver, Crude Oil and Foreign Exchange on October 27th" was carefully www.xmhouses.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thank you for your support!

Due to the author's limited ability, time constraints and other reasons, some contents in the article still need to be further discussed and studied in depth. Therefore, in the future, the author will conduct extended research and discussion on the following issues: