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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 rebounds to 1.2950 on lower oil, risk aversion ahead of Powell's Fed speech, and BOC inflation data

Alina Haynes

Jun 22, 2022 14:48

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During Wednesday's Asian session, USD/CAD bulls return to the table following a two-day vacation as the price refreshes its intraday high over 1.2950. In doing so, the Loonie-U.S. dollar pair reflects a higher U.S. dollar with the market's risk-averse mindset anticipating Fed Chair Jerome Powell's speech. The drop in oil prices, Canada's most significant export commodity, helps to the upswing.

 

With the Fed's aggressiveness and the US recession raising concerns, the US Dollar Index (DXY) achieves its first daily gain of the week at approximately 104.60. Joe Biden, the Vice President of the United States, and Janet Yellen, the US Treasury Secretary, both tried to reassure investors that a recession was not imminent. US economy will not return to past decade of stable growth, employment and inflation, according to Thomas Barkin, president of the Federal Reserve Bank of Richmond, as reported by Reuters.

 

In contrast, WTI crude oil prices have touched a new monthly low of around $108.00, a fall of 1.5 percent as of press time, as US President Biden argues for reduced energy costs. After U.S. President Joe Biden attempted to lower rising fuel costs by putting pressure on large U.S. firms, oil prices dipped in the early trade of Wednesday, as reported by Reuters. Notable is the fact that Biden plans to suspend the federal gas tax to lower energy prices.

 

Canadian retail sales rose by 0.9 percent in April, above expectations of 0.8 percent and an earlier upwardly revised 0.2 percent, according to data released on Tuesday. There was a two-year low in the number of annualized existing home sales in the US. Chicago Fed's National Activity Index fell to 0.01 in May from an upwardly revised 0.04 in April, further demonstrating the weakening of the economy.

 

Ahead of Fed Chair Jerome Powell's key testimony, the USD/CAD is predicted to witness additional gains due to the recent risk-aversion wave that has backed the US dollar's recovery advances and has also favored oil bearish. Important to follow for May is the Bank of Canada's (BOC) Consumer Price Index Core, which is predicted to grow 5.9 percent year-over-year compared to 5.7 percent in April. An rise of 1% is expected in March, up from 0.6% the previous month, according to expectations for the Canadian Consumer Price Index (CPI).

An Examination of the Technical Aspects

Despite the current rebound, purchasers of USD/CAD remain cautious because the quotation has maintained the previous day's break to the downside of an ascending trend line from June 8th. (now 1.3090).


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