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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.

Risk sentiment improves. USD/JPY trading fluctuates, "short trap" strengthens the upward trend

Oct 26, 2021 11:04

On Thursday (October 7), the US dollar against the yen fluctuated within a narrow range, fluctuating between slight rises and slight declines, and is currently trading at around 111.30.


A series of factors helped USD/JPY gain some positive traction in the first half of Thursday, despite the lack of further bullish momentum. The risky urge in the market weakened the safe-haven yen. After the Bank of Japan lowered its assessment of 5 of Japan’s 9 regional economies, the yen was under further pressure.

On Wednesday, after Russian leaders assured Europe of natural gas supplies, global risk sentiment took a dramatic turn. In addition, the US Senate Republican leader McConnell said that the party will allow the federal debt ceiling to be extended to December to avoid a federal debt default. This has further stimulated investors' interest in high-risk assets such as stocks.

But the weaker dollar tone inhibited any meaningful upside of the dollar against the yen. Due to the market expectation that the Fed will tighten its policy early and the recent widening of the US-Japan Treasury bond yield gap, the downward momentum of the exchange rate has still been cushioned.

Since the Fed hinted at the end of September that it would start reducing the scale of monthly bond purchases by the end of 2021, US bond yields have been rising. Fearing that soaring energy prices will trigger inflation, the market seems to have begun to digest the possibility of the Fed raising interest rates in 2022. This will boost the U.S. dollar and the U.S. dollar against the yen.

The fundamental background seems to be favorable to the bulls and supports the prospect of continuation of the recent appreciation trend of the past three weeks or so. However, investors seem to be reluctant to bet heavily, preferring to wait and see before the closely watched US Monthly Employment Report (NFP) is released on Friday.

At the same time, traders may get clues from the weekly unemployment claims data released by the United States on Thursday, which will be released in the North American market in early trading. In addition, US bond yields and broader market risk sentiment will affect the dollar against the yen and allow traders to seize some meaningful opportunities.

From a technical point of view, the “short trap” under the 38.2% retracement level of 110.95 for USD/JPY has strengthened the overall upward trend. There is room for the exchange rate to rise to 112.08, 112.23, and 112.40. These three levels are 2021. , 2020 and 2019 highs.

If it goes down, 110.95, 110.60 and 110.25 are all expected to provide support.

(Daily chart of USD/JPY)

At GMT+8 16:38, the USD/JPY traded at 111.37.