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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.

Indian rupee pares losses below 78.00 amid rumors of a rate rise by the Reserve Bank of India

Alina Haynes

Jun 07, 2022 14:35

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During the first hour of Tuesday's Indian trading day, the USD/INR extends its fall from a two-week high and retests daily lows near 77.70.

 

In doing so, the Indian rupee (INR) pair appears to be preparing for the Reserve Bank of India's (RBI) rate rise while paying some attention to the broad US dollar gains and Foreign Portfolio Investors' (FPI) exit from Indian markets. The cause may possibly be related to recent risk-positive news reports from China.

 

Despite this, an eight-year high in Indian inflation has prompted market speculation of a significant rate rise by the RBI at its meeting on Wednesday. "All 47 experts in a Reuters survey predicted that the repo rate will be lifted for a second consecutive month from 4.40 percent to a range of 25 to 75 basis points," said Reuters.

 

The survey continues, "India's bond markets are also anticipating liquidity tightening measures, with many experts projecting a 50 basis point hike in the cash reserve ratio for banks as the RBI strives to restore monetary conditions to pre-crisis levels."

 

In addition, news articles indicating confidence in Asia's leading economy, China, contribute to the INR's strength. China Securities Journal (CSJ) lauded the nation's viral control and policy stimuli while predicting economic growth in the second half of 2022 (H2). Previously, Beijing's ability to overcome the pandemic and citing preparations to recover from the economic loss with faster unlocks, along with US President Joe Biden's likely easy stance for China, as far as demonstrating readiness to remove Trump-era tariffs, appeared to support sentiment and test INR bears.

 

Alternatively, a substantial outflow of foreign cash and rising oil costs, a significant strain on the Indian budget deficit, provide difficulties for USD/INR sellers. Yesterday, foreign investors sold the most Indian government bonds in a single session in a month, according to NewsRise, citing Reuters.

 

In addition, increased speculation over the Fed's faster/heavier rate rises, particularly following Friday's US employment report, drives the USD/INR exchange rate. A robust US Nonfarm Payrolls (NFP) report and the last dose of hawkish Fedspeak before the blackout norm helped US Treasury rates conclude the week on a positive note, reversing a three-week downward trend. According to the most recent data, market participants predict a rate rise of 0.50 percent by the Federal Reserve in September with a probability of 70 percent, up from 30 percent a week earlier.

 

The US Goods and Services Trade Balance for the upcoming month, projected at $-89.5B compared to $-109.8B in prior readings, can excite intraday traders, but the RBI decision on Wednesday and the US Consumer Price Index on Friday will garner the most attention (CPI).

Technical Evaluation

A daily closing above 77.85 looks essential for USD/INR bulls to target the May record high at 78.15. Meanwhile, 77.35 and March's peak around 77.17 restrict the pair's near-term fall.