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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.

Prior to the Release of EU/US PMIs, EUR/USD Pares Its Largest Daily Drop in Three Weeks to Approximately 1.0650

Daniel Rogers

Dec 16, 2022 12:04

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Early Friday morning, EUR/USD demonstrates minor gains near 1.0640 as it retests the intraday high. As a result, the primary currency pair consolidates the steepest daily fall in three weeks while reversing the previous day's retreat from the highest levels in six months prior to the release of important European and American economic data.

 

The aggressive rate hike of 0.50% by the European Central Bank (ECB) propelled the EUR/USD pair to a fresh multi-day high of 1.0736 on Thursday evening. However, predictions of a recession bolstered demand for the US Dollar as a safe-haven currency, submerging the quotation.

 

In spite of this, the ECB's announcement of a 50 basis point (bps) rate increase met market expectations. However, President Christine Lagarde's comments bolstered the optimistic outlook, as she noted, "Information indicates 50 basis points at the next meeting, probably also at the next meeting, and thereafter." In addition, the ECB announced its intention to discontinue the Asset Purchase Program (APP) via gradual Quantitative Tightening (QT).

 

It should be noted that the typically hawkish rate announcements from the major central banks coupled fears of rising inflation and the energy crisis to amplify recession concerns, allowing the US Dollar to enjoy its role as a safe-haven currency despite contradictory facts.

 

In November, US Retail Sales came in at -0.6% month-over-month, compared to 0.1% expected and 1.3% prior. In addition, manufacturing survey findings from the Philadelphia Fed and the New York Fed were dismal for the relevant month, while Industrial Production declined in November and Jobless Claims decreased for the week ending December 9.

 

In response, Wall Street benchmarks fell and US Treasury bond yields increased, allowing the US Dollar Index (DXY) to notch its highest daily gains in 10 weeks. As traders await the first readings of December activity statistics for Germany, the Euro Area, and the United States, S&P 500 Futures and US Treasury bond yields have been flat as of late. The final inflation figures for the Eurozone will also be vital to track.