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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 OPEC+ meeting struck, can the US dollar against the Canadian dollar fall further?

Oct 26, 2021 10:54

On Monday (October 4), there was some sell-off in the US dollar against the Canadian dollar for the third consecutive trading day. A combination of factors should help limit losses and give bears reason to be cautious. However, the US dollar/Canadian dollar needs to continue to fall below the 1.2600 mark to confirm a new breakthrough. The US dollar was still on the defensive against the Canadian dollar before the European market, with a slight decline. The OPEC+ ministerial meeting during the day and the September non-agricultural data of the United States on Friday attracted investors' attention.



Two major events hit this week, and the foreign exchange market is eagerly waiting


After a bumpy third quarter, 2021 will enter the final stage. The United States will release key employment data on Friday. OPEC+ will hold a meeting within the day to evaluate oil production. The foreign exchange market remains cautious until the key meeting and data are released.

In September, the Federal Reserve stated that it might "soon" reduce the scale of monthly bond purchases. Powell pointed out that a "decent" employment report is needed to initiate the reduction. The September non-agricultural employment data released on Friday will be the last official employment report before the Fed’s November meeting.

The survey predicts that after the sharp drop in the number of jobs in August, the United States will add 500,000 jobs. Stronger-than-expected data may exacerbate market concerns that the Fed may loosen its loose monetary policy faster than expected, and may trigger more market turmoil.

The OPEC+ ministerial meeting will be held today to review the oil production policy. They are facing a three-year high of oil prices exceeding US$80 per barrel, as well as pressure from consumers to increase supply. Until recently, sources also expected OPEC+ to stick to the existing plan reached in July, increase production by 400,000 barrels per day per month, and gradually cancel the plan to reduce production by 5.8 million barrels per day.

However, with the unexpected shutdown of production in the United States and the strong recovery in demand after the epidemic, oil prices have been pushed up. At the same time, the White House expressed concern about high oil prices and said that it is communicating with OPEC+ to find a way to solve the problem of oil costs. Some sources said that OPEC+ may release more oil to the market.

Optimistic economic data, weak risk sentiment still supports the dollar


The currency pair fell slightly for the third consecutive trading day on Monday, but a series of factors helped limit further losses. The fall in crude oil prices weakened the Canadian dollar related to commodities and provided some support for the US dollar against the Canadian dollar. The optimistic data boosted the US stock market. Personal spending, personal consumption expenditure (PCE) core deflator, University of Michigan consumer confidence index, and manufacturing PMI and ISM data were slightly better than expected.

The market's expectations of the Fed's early tightening of policies have stabilized, which has supported the US dollar, and the US dollar has further benefited from the weakening of the risk tone. Investors seem to be convinced that the Fed will begin to reduce bond purchases before the end of 2021 and raise interest rates in 2022.

In addition, market risk sentiment remains weak. Although the US stock market took a strong lead last Friday, most Asian stock markets have weakened today. Uncertainty on economic recovery, the impact of OPEC+ and high energy prices seem to have put pressure on investors, pushing some safe-haven funds to flow to safe-haven U.S. dollars.

The outlook of the energy crisis pushed the US dollar against the Canadian dollar to fall slightly, and the 1.26 mark attracted short-term attention


Although crude oil prices fell slightly, rising commodity prices continued to support the Canadian and Australian dollars. Natural gas prices remain at their highs in the past 7 years. At present, investors are remaining cautious, waiting for the OPEC+21 ministerial meeting in the coming days. The focus will be on the expected increase in output of 400,000 barrels per day.

From a technical point of view, so far, the currency pair has successfully held the 1.2600 mark and last week's volatility low. This key support level has attracted the attention of short-term investors. At the same time, broader market risk sentiment will affect the U.S. dollar and provide a new impetus for the U.S. dollar against the Canadian dollar. In addition, oil price dynamics may further bring some short-term trading opportunities for the US dollar against the Canadian dollar.


(Daily chart of USD/CAD)

GMT+8 At 15:42 on October 4, the U.S. dollar against the Canadian dollar reported 1.2641.

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