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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.

The New Zealand dollar soared to a three-week high! Supported by two positives

Eden

Oct 26, 2021 10:52

On Thursday (October 14), the New Zealand dollar rose sharply against the U.S. dollar, hitting a three-week high. It is currently hovering above the 0.7030 area, boosted by the weakening of the U.S. dollar and expectations of interest rate hikes.


Multiple favorable factors helped the New Zealand dollar to continue the rebound from the 0.6910 support level after the US inflation data the previous day and the market rose for the second consecutive day on Thursday. At a time when the demand for the US dollar is weak, the stock market as a whole rises, and the continued risk appetite is favorable for risky currencies.

On Wednesday, the U.S. dollar appeared a typical "buy rumors, sell the facts" market. After the release of the US inflation data, it reversed the upward trend of this week to a 13-month high. The overall US CPI in September was actually 0.4%, an annual rate increase of 5.4%. The data was slightly higher than market expectations, but failed to stimulate dollar bulls.

Investors still seem to agree with the Fed’s inflationary rhetoric, as evidenced by the further decline in long-term U.S. Treasury yields. This is also another factor that suppressed the dollar's decline. Nevertheless, the expectation that the Fed will soon announce a reduction in the size of its debt purchases, as well as the expectation that the Fed may raise interest rates in advance, have helped limit the dollar's decline.

The minutes of the Fed's Federal Open Market Committee (FOMC) monetary policy meeting in September show that the Fed will continue to reduce bond purchases as planned later this year. In addition, more and more policy makers worry that inflation may continue, forcing investors to advance the possible interest rate hike from December 2022, which is already reflected in prices, to September 2022.

The strength of the New Zealand dollar is also supported by the lead of interest rate hikes by the Reserve Bank of New Zealand.

The Reserve Bank of New Zealand raised the official cash rate (OCR) by 25 basis points to 0.5% last Wednesday (October 6), in line with market expectations. The outside world generally believes that the interest rate hike is aimed at curbing the rise in inflation and cooling the overheated economy.

This is also the bank's first rate hike in seven years. The Reserve Bank of New Zealand is expected to raise interest rates by another 25 basis points to 0.75% in November, and will raise interest rates three more times next year. By August, the official cash rate will reach 1.5%, which is second to none among the world's major central banks.

However, Geoff Bascand, vice chairman of the Federal Reserve Bank of New Zealand, expressed concern on Thursday: New Zealand’s rapid economic recovery still faces risks from the new crown virus and “unsustainable housing prices”, so the financial sector needs to avoid taking too much. Debt.

Baskander said that the strong balance sheets of households, banks and the government have allowed the country to recover strongly and need to be protected.

He said in a speech: "We are still in a state of high uncertainty; the new crown epidemic still poses a risk to economic recovery, and we assess that housing prices are at an unsustainable level."

"We will take action when needed to ensure that the balance sheets of regulated financial institutions can withstand future pressures from the economy and financial system and avoid excessive exposure to vulnerabilities."

The upper resistance pays attention to 0.7052, 0.7081, 0.7103, and the lower support pays attention to 0.7000, 0.6979, 0.6934.

(New Zealand dollar against the US dollar daily chart)

At 21:24 GMT+8, the New Zealand dollar was quoted at 0.7033 against the U.S. dollar.