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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.

NZD/USD Is Under Pressure in an Equity Market Sea of Red

Daniel Rogers

May 09, 2022 10:16

On Monday, the NZD/USD pair is under pressure as risk-averse sentiment drags on the high beta currency complex. At 0.6380, the bird is 0.38 percent lower than its previous high of 0.6412 and its previous low of 0.6377.

 

At the start of the week, Asian markets are a sea of red and the US dollar is higher. The dollar continues to be supported by significantly rising US yields as lockdowns in China, the Ukraine crisis, and rising interest rates continue to weigh on the currency. The ASX 200 is down 0.8%, the Nikkei 225 is down 1.1%, and the KOSPI is down 0.2%.

 

China's COVID-19 outbreaks have dimmed the risk sentiment forecast on Monday. According to Reuters, Shanghai is increasing its already stringent COVID-19 quarantine in an effort to eradicate illnesses outside of quarantined sections of China's largest city by the end of this month.

 

"While NZD volatility has decreased compared to the 24 hours following the Fed meeting, bond (and stock) markets continue to exhibit significant volatility, with US bond rates rising another notch in response to improved employment statistics," ANZ Bank analysts said.

 

Given this week's data calendar, it is difficult to predict a reduction in market volatility, with the US Consumer Price Index topping the list and NZ inflation expectations data also expected.

 

"Risks surrounding the US CPI appear binary," stated analysts at ANZ Bank. "A decrease from 8.5 percent (to 8.1 percent, as the markets anticipate) would be modestly reassuring, but an increase would unquestionably rekindle expectations for 75bp Fed rises and likely support the USD. The notion that synchronized global tightening might go softly feels like a distant memory in light of the reality of volatility.

 

According to analysts at TD Securities, "core prices likely remained high in April, regaining pace to 0.5% m/m after registering 0.3% m/m in March. Although the prices of pre-owned automobiles certainly decreased once more, it is likely that the reduction was less pronounced than in the past report. We also anticipate renewed housing inflation vigor. "Our MoM projections indicate 8.1 percent / 6.1 percent YoY for total / core prices, presumably confirming that March was the cycle's.

 

In addition, Fed speakers will also be present this week. Governor Christopher Waller and New York Fed's John Williams may have a significant role. Traders will be expecting for clarification after Fed Chairman Jerome Powell's press conference last week failed to provide much insight into what the Fed would do following the front-loading of rate hikes until neutral.

 

Traders anticipate Chinese trade data to reveal a significant deceleration in export growth and a deterioration in imports, with most provinces under restrictions and Shanghai in lockdown for a full month. 

NZD/USD

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