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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

AUD/USD has maintained a multi-day bottom under 0.6700 as Q2 GDP is mixed and focus switches to Fedspeak

Daniel Rogers

Sep 07, 2022 16:47

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In the wake of contradictory Aussie data and a risk-averse atmosphere during Wednesday's Asian session, the AUD/USD strengthened its bearish bias towards the 0.6700 level and dropped to its lowest level since July 14. Risk barometer pair ignores Australia's efforts to tame inflation-driven economic woes ahead of next month's annual budget presentation.

 

Australian GDP for Q2 slowed to 0.9% from 1.0% expected and 0.8% in the previous quarter. Compared to the market consensus of 3.5% and prior readings of 3.3%, the year-over-year numbers imply a growth rate of 3.6%. The AiG Performance of Services Index for Australia topped 53.3 in August, up from 51.7 earlier in the day.

 

The government of Australia plans to cut the cost of pharmaceuticals and provide assistance to seniors in light of rising inflation. In anticipation of next month's federal budget, Prime Minister Anthony Albanese announced that legislation would be introduced to reduce the maximum co-payment on Australia's pharmaceutical benefits scheme from A$42.50 ($20) per prescription to A$30 ($20). It was also reported that pensioners will receive financial incentives from the government to help them sell their larger homes and move into smaller ones, thus lowering the strain on their retirement savings.

 

However, mounting fears of economic slowdown due to the energy crisis and China's covid troubles, combined with stronger US data and hawkish Fed bets, have supported the US dollar. Despite this, the US Dollar Index (DXY) is currently trading near its 20-year highs, with intraday advances of 0.22 percent near 110.50. CME's FedWatch Tool recently predicted a 50 bps rate hike in September, up from 57 bps the day before.

 

The 10-year US Treasury rate soared to its highest level since mid-June as Wall Street ended in the red, mirroring the general mood. Commodity prices, including oil and gold, continued under pressure, suggesting risk aversion and adding pressure to the AUD/USD exchange rate, which contributed to a decline in S&P 500 Futures of 0.50%.

 

Before the Fed's statement, the AUD/USD will be affected by China's August trade numbers. Reserve Bank of Australia (RBA) Governor Philip Lowe and Federal Reserve Chair Jerome Powell will both speak on Thursday, and their remarks will be widely studied for signs of policy shifts.