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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.

Focus on US inflation as US Dollar Index fights to hold around 20-year high of over 108.00

Alina Haynes

Jul 13, 2022 10:54

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The US Dollar Index (DXY), which oscillates close to the greatest levels in two decades, which were attained the day before, illustrates the market's nervousness prior to substantial US inflation data. As a result, the dollar index versus the six most important currencies regains recent losses and defends the 108.00 level, remaining at 108.16 during Wednesday's Asian session.

 

The White House (WH) statement and subpar US data contributed to the DXY's decline from the previous day's multi-year high. In a memo, the White House said that "US economic statistics, notably the June jobs report, are inconsistent with a recession in the first or second quarters," according to Reuters on Tuesday. The news helped the market book profits ahead of crucial data and events.

 

Additionally, in June, the US NFIB Business Optimism Index registered 89.5 vs. 93.1, its lowest reading since early 2013.

 

It should be noted, though, that the most recent economic projections from the International Monetary Fund (IMF) seem to have reignited market concerns and increased demand for the US dollar. The IMF lowers its US GDP growth prediction for 2022 from 2.9 percent in late June to 2.3 percent as a result of fresh US data. The issues of growing inflation and the significant Federal Reserve interest rate increases necessary to control prices were highlighted by the Fund's inclusion of the new estimates in the entirety of its annual assessment of the U.S. economy, according to Reuters.

 

Concerns about a viral variant spreading to Shanghai and causing a lockdown in Wugang, Henan Province, came from China at the same time.

 

The main obstacle to the DXY's movements is probably the market's anxiety ahead of the critical US CPI for June, which is expected to increase to 8.8 percent YoY from 8.6 percent YoY. Prior to the announcement of the inflation data, Thomas Barkin, president of the Federal Reserve Bank of Richmond, said, "There is a road to lower inflation, but a recession is possible."

 

Despite the brief recovery, Wall Street benchmarks ended in the red as 10-year US Treasury rates fell for the second day in a row, to about 2.97 percent. Additionally, Wednesday's opening of the S&P 500 Futures shows minor increases.

 

Future DXY traders will need access to US inflation data, but they may also find fun in news from China and speculations surrounding Russia. DXY may experience more increases if the US CPI shows a favorable surprise.


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