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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.

As US Inflation Data Looms, the USD/CAD Tracks Oil's Failure To Move Above 1.3300

Alina Haynes

Feb 14, 2023 14:44

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The USD/CAD shows the market's caution as traders anticipate Tuesday morning's release of the US Consumer Price Index (CPI) for January. After a two-day decline, the Canadian dollar-U.S. dollar pair holds a position near 1.3330.

 

However, the most recent decrease may be a result of the US Dollar's inability to maintain its earlier weekly gains in the face of falling US Treasury bond yields. Nonetheless, the declining price of Oil, Canada's principal export, and the Federal Reserve's (Fed) hawkish pronouncements are enticing USD/CAD bulls.

 

Concerns about additional releases from U.S. strategic petroleum reserves have kept the price of WTI crude oil below $79,50 a barrel (SPR). According to Organization of the Petroleum Exporting Countries (OPEC) Secretary-General Haitham Al Ghais, the price of black gold disregards earlier reports anticipating a supply constraint as a result of Russia's threat to reduce output and the anticipation of increasing energy demand.

 

Fed Governor Michelle Bowman reportedly told Reuters that the Federal Reserve will continue to raise interest rates until they reach a suitable level to return inflation to the target rate. President of the Federal Reserve Bank of Philadelphia, Patrick Harker, dismissed speculations of a 2023 Fed rate cut. Nonetheless, the official stated, "The Fed is unlikely to decrease interest rates this year, but could do so in 2024 if inflation begins to decline."

 

Notably, it appears that the recent decrease in US inflation expectations from a multi-day high has weighed on US Treasury bond yields and the US Dollar. The Federal Reserve Bank of St. Louis (FRED) 10-year and 5-year breakeven inflation rates decrease from monthly highs to 2.31 percent and 2.44 percent, respectively.

 

As Wall Street closes in the green, S&P 500 Futures follow the sentiment with slight gains, which weigh on the US Dollar. As a result, 10-year US Treasury note yields decline by around two basis points to 3.69 percent at the latest.

 

Since recent Federal Reserve (Fed) pronouncements indicating potential rate hikes appear muted, USD/CAD traders should keep a close eye on the US CPI data in the near future. In addition, discussions regarding the Fed's policy shift are approaching, so any negative US inflation data will not hesitate to send the Loonie pair down. Likewise, monitoring the price of oil is vital.