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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.

Foreign exchange trading reminder on October 4: The US dollar fell for two consecutive days, but the weekly line recorded a rise since the end of August

Oct 26, 2021 10:54

On Friday (October 1), following the rebalancing of capital flows and the stock market rebound on the first day of the quarter, the U.S. dollar fell against G-10 currencies across the board on Friday. Commodity currencies rebounded against the U.S. dollar. The yield on the 10-year U.S. Treasury fell for the third consecutive day, falling to 1.46%.

The U.S. dollar index fell 0.20% to 94.05, due to the combined effects of speculative profit settlement after the sharp rise at the end of the quarter, corporate hedging, and new allocations by large mid- and long-term investors.

The US economic data released on Friday was mixed, adding to the weakness of the US dollar before the weekend. In the United States, consumer spending rose more than expected in August, increasing by 0.8%, but consumption in July was revised down to a decline of 0.1%, instead of the previously announced increase of 0.3%. Inflation remains high, but not much. The core personal consumption expenditure (PCE) price index, which excludes unstable food and energy components, rose 0.3% in August, the same rate as the previous month. Manufacturing data is more optimistic. The Institute of Supply Management (ISM) announced that the manufacturing index rose to 61.1 in August and 59.9 in August.

The higher-than-expected U.S. inflation data prompted traders to speculate on the timing of the code reduction and interest rate hike; two Fed officials reiterated their support for reducing the scale of asset purchases in the near future. Marc Chandler, chief market strategist at Bannockburn Global Forex, said that a more hawkish stance seemed to be the key factor that pushed the dollar higher at the end of September. However, the current focus is on fiscal policy, although investors seem to have seen it through, because many people believe that US debt default is unthinkable.

The euro is the worst among the G-10 currencies, rising 0.14% against the US dollar to 1.1596, after falling for five consecutive days; this week it fell by about 1.06%, the largest percentage drop since mid-June.

The dollar fell 0.22% to 111.05 against the yen, and the risk reversal expanded, indicating that the demand for yen call options was higher; during the New York session, the decline of the dollar against the yen was limited due to stock market rises and hedging activities.

The Norwegian Krone, the New Zealand dollar and the British pound led the gains after a sharp decline in the third quarter; Neil Jones, head of foreign exchange sales at Mizuho Bank’s financial institutions, said that these currencies were all sold off at the end of the last quarter. The quarter is over and we are starting again.

The British pound rose 0.53% to 1.3546 against the US dollar; corporate buying and medium- and long-term large-scale investor buys boosted the pound earlier, speculative accounts tried to do more pound against the euro; the euro fell 0.4% against the pound for the second day in a row Go lower. Due to increasingly serious supply chain problems, the pound's performance in the last quarter was poor, falling by 2.5% and recording its worst weekly performance in more than a month.

The Australian dollar rose 0.43% against the US dollar to 0.7258, and fell 3.6% in the third quarter. It was the worst performance among the Group of Ten currencies against the US dollar due to the sharp drop in the price of Australia’s largest export commodity, iron ore. The Norwegian Krone rose 1.5% against the U.S. dollar; the New Zealand dollar rose 0.67% against the U.S. dollar.

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OPEC+ holds the 21st Ministerial Conference

Summary of Institutional Views


Financial website Fxstreet: The U.S. dollar is overbought, showing signs of exhaustion of the rally


Market risk aversion once again dominated the financial market this week, with the US dollar and gold prices rising, but the US dollar is already overbought against most major currencies, and the possibility of a corrective decline is higher. The US gross domestic product in the second quarter was revised up to 6.7% from the previous quarter, slightly better than expected. But until the non-agricultural employment report is released next week, the employment data has been disappointing. Earlier, the euro against the U.S. dollar EUR/USD fell to a new low of 1.1562 in 2021, and the British pound against the U.S. dollar GBP/USD bottomed out at 1.3516. Commodity-related currencies rebounded well, but from a broader perspective, these gains appear to be in the consolidation phase.

United Overseas Bank: EUR/USD is expected to find solid support near 1.1530


Last trading day we emphasized that the euro may weaken further, the next support level is 1.1565, followed by the key level of 1.1530. The euro fell to 1.1561 yesterday and then closed at 1.1581. The downward momentum of Europe and the United States has slowed down. Although the euro may fall further, the main and strong support level of 1.1530 may not be easily broken. In general, as long as the strong resistance level of 1.1655 is not broken, the current downside risks will not change.

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