The U.S. employment data was stronger than expected, and overseas institutions have postponed their expectations for the timing of a U.S. interest rate cut from July to November.
Why is the US interest rate cut so important: The Federal Reserve's decision has always been regarded as a barometer of the world economy. Because the US dollar is the world's main currency in circulation, the Federal Reserve's monetary policy is crucial to the flow of global funds.
Impact on financial capital flow: Since the US interest rate hike, it has attracted a large amount of capital to flow into the US market. The northbound capital, which has the greatest impact on us, began to decline rapidly in 2022, and the Shanghai Composite Index began a two-year decline. The market has suffered from the US interest rate hike for a long time.
Once the United States cuts interest rates, it means that the yield on the US dollar will fall and its attractiveness will weaken, causing global capital to flow out of the United States in search of regions with higher yields. This is good news for the capital markets of other countries. Among the major economies in the world, A-shares are definitely the most cost-effective one. With the increase in funds, the market's risk appetite level will also increase, which is conducive to the development of the market.
Depreciation of the US dollar - appreciation of the local currency: If the US cuts interest rates, the US dollar will flow to other countries and regions with high returns. If other countries do not take any action, their currencies will appreciate relative to the US dollar. When the local currency appreciates, the purchasing power will increase. For example, it used to take more than 700 to exchange for 100 US dollars, but now it will take more than 600 to exchange for 100 US dollars. #BTC
