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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.

USD/CAD Traded Mostly Flat in the Post-Jobs Data Dollar Strengthening

Larissa Barlow

Apr 02, 2022 09:42

Tips 

  • Due to the focus on Russia-Ukraine, the dollar strengthened while the euro fell.

  • After solid US job data, a significant portion of the yield curve reversed.

  • Prices of gold and silver fell as yields and the dollar soared.

  • Oil prices oscillated as the EIA met to discuss the deployment of additional oil reserves.

 

The dollar has remained relatively stable against the Loonie, as good US economic data has slowed the expected downward pressure in the near term. Yields on benchmark bonds increased by several basis points. The yield curve's 2s-10s segment reversed following strong employment figures, a crucial indicator of recession in the future years. Gold prices fell as yields increased and the dollar strengthened. Oil prices fell sharply in tumultuous trading as members of the International Energy Agency (IEA) convened to examine the possibility of releasing additional oil reserves. Over the following six months, the US aims to release 180 million barrels, or one million barrels every day. This is the largest release from the US Strategic Petroleum Reserves in history (SPR). Regardless of the discharge, oil supplies will continue to be a problem in the coming months.

 

On Friday morning, a slew of vital economic data were released. Nonfarm payrolls, a proxy for the total number of workers in the United States, increased by 431,000 in March. Despite rising inflation and the risk of an economic slump, the reading was somewhat below the projected 490,000 figure. Unemployment fell by 0.2 percent to 3.6 percent, falling short of estimates of 3.7 percent. Hourly wages increased by 0.4 percent on average, in line with predictions. The reading is used to closely monitor inflation. Today's economic numbers were unsurprising, indicating that the Fed will most likely hike rates at each of the remaining six FOMC meetings this year.

Technical Evaluation

The USD/CAD trades slightly higher as the dollar strengthens on the back of solid economic data indicating an improving labor market. Despite this, the currency pair is under pressure to the downside and will likely continue to trade lower. Although the pair has broken through the crucial 1.25 barrier, the Loonie remains optimistic in the medium term due to the ongoing oil supply constraint and Ukraine-Russia tensions. If the pair breaks through 1.26, the downward trend becomes less assured. The horizontal trendline near the January lows of 1.246 provides support. Resistance is located near the ten-day moving average, which is now at 1.252. The short-term momentum goes positive as a result of the fast stochastic generating a purchase signal.

 

Although the MACD line generated a crossover sell signal, the medium-term momentum is negative but favorable. When the MACD line (the 12-day moving average minus the 26-day moving average) passes the MACD signal line, this scenario occurs (the 9-day moving average of the MACD line).

 

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