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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.

In anticipation of UK Retail Sales, the British Pound falls to a new monthly low near 1.1900

Daniel Rogers

Aug 19, 2022 12:01

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On Friday's Asian session, the pound to dollar exchange rate (GBP/USD) accepted offers to reaffirm its monthly bottom at 1.1905, falling for a third consecutive day on concerns about the UK economy, aggressive Fedspeak, and upbeat US data.

 

Bloomberg reports that Indonesian President Joko Widodo has invited Chinese President Xi Jinping and Russian President Vladimir Putin to the Group of 20 Summit in Bali later this year. Recent market movement in favor of the US dollar may have this explanation. This was the first time the leader of the world's fourth-most populous nation had announced that both of them will be attending the November conference, according to the news.

 

August's record low for the GfK Consumer Sentiment Index in the United Kingdom was even lower than July's record low of -41. Following the release of the data, Reuters said, "British consumers are experiencing a'sense of aggravation' about the growing cost of living, according to the country's longest-running research of household finances.

 

British employment and inflation figures were reported earlier in the week, but this did not help the GBP/USD as the strong US economy and aggressive Fed talk encouraged pair bears.

 

Weekly Initial Jobless Claims declined to 250K from 265K market consensus and 254K correction, whilst the Philadelphia Fed Manufacturing Survey for August rose to 6.2 from -5 expected and -12.3 before.

 

The Fed will keep raising interest rates to "right-size" the economy, according to Mary Daly, president of the Federal Reserve Bank of San Francisco. The policymaker indicated that a move of 50 basis points or 75 basis points would be acceptable for the September rate decision. But Neel Kashkari of the Minneapolis Federal Reserve reportedly does not think a recession is happening in the country at the moment. President of the Federal Reserve Bank of St. Louis and self-proclaimed "lifelong hawk" James Bullard is considering a further rate hike of 75 basis points in September. According to Reuters, investors expect a hike to a range of 3.50–3.75 percent by March of next year, based on trade in futures contracts related to the Fed's policy rate. As a result, the Federal Reserve target rate is between 2.25 and 2.50 percent as of right now.

 

Finally, Wall Street ended with a lackluster performance, putting pressure on S&P 500 Futures, while US 10-year Treasury rates rebounded from their previous day's drop from the monthly high to 2.891% as of press time.

 

For new guidance, GBP/USD traders will focus on August UK Retail Sales, which are predicted to be -3.3% YoY compared to -5.8% in July.