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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/ZAR Forecast: Rand Depreciates by 6% Following Declaration of State of Emergency

Larissa Barlow

Apr 24, 2022 10:41

National Disaster Declared Following Deadly Kzn Floods 

On April 11th and 12th, the province of KwaZulu-Natal (KZN) received between 200 and 400 millimeters of rain in 24 hours, resulting in the displacement of tens of thousands, billions of rands in damage to infrastructure, residences, and businesses, and a death toll over 500.

 

Due to the gravity of the crisis, the government declared a national state of disaster in order to assist individuals and assist with infrastructure reconstruction. Despite the flooding's limited nature, the floods will have a national impact, as SA's major port in the coastal city of Durban has been negatively affected, resulting in shipping delays.

The Electricity Utility Fights To Keep The Lights On

Eskom, South Africa's sole energy provider, announced on April 8 that load shedding will begin immediately owing to outages at the Kendal, Duvha, Camden, and Kusile power facilities. While several units were restored immediately, it takes time for them to reach full capacity, necessitating the usage of emergency producing reserves.

World Economic Outlook 2022, International Monetary Fund

The IMF revised down global growth earlier this week, citing the Ukraine crisis, persistent inflation, and global tightening monetary policy. Significant economies saw downward adjustments, with the US falling from 4% to 3.7 percent and China falling from 4.8 percent to 4.4 percent. Reduced growth in the US and China implies decreased future demand for goods from exporting nations such as SA, which could result in more economic headwinds. Surprisingly, the IMF maintained SA's growth predictions for 2022 and 2023 at 1.9 percent and 1.4 percent, respectively.

USD/ZAR Technical Support and Resistance Levels

The rand has lost over 7% of its value against the strong dollar during the last four trading days. Prior to the current surge in the USD/ZAR exchange rate, the rand was one of the better performing currencies against the dollar. The dollar is fundamentally sound, having benefited from a safe-haven appeal during the early phases of the Ukraine war but now benefiting from aggressive rate hike predictions for the remainder of 2022.

 

The unraveling of the risk-aligned commodity trade, which is linked to global rate hike cycles, adds to the ZAR's troubles by reducing aggregate demand (money becomes more costly to borrow) and frequently results in a slowdown in GDP.

 

The USD/ZAR pair tested the 15.70 mark and has now retreated significantly from that level, which corresponds to the Jan 28 high. USD/ZAR tends to trade near significant psychological levels (purple lines), making 15.50 the closest level to consider. A closure below 15.50 indicates a regression towards trendline support (established from the Jan 28 high), with secondary support at 15.00.

 

However, the rand is vulnerable to further selling due to the abrupt change in ZAR fundamentals. 15.70 is the next resistance level, whereas 16.00 is the secondary level.

USD/ZAR Daily Chart 

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