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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.

Watching the foreign exchange market on October 15: technical analysis of the euro, the pound sterling and the Australian dollar

LEO

Oct 26, 2021 10:52

Currency: EUR/USD



Resistance 2: 1.1680

Resistance 1: 1.1620

Spot price: 1.1591

Support 1: 1.1525

Support 2: 1.144

On Thursday, the euro retreated from Wednesday’s high. On Wednesday, the US Bureau of Labor Statistics (BLS) announced inflation data. The consumer price index rose by 5.4% in September, higher than the 5.3% expected by analysts, indicating that US residents are struggling to cope with price increases. In addition, the core consumer price index, which excludes food and energy costs, rose 4%, the same as the previous value. Following the release of the US inflation data, the US dollar initially strengthened, but it seems that the market has already digested the rise in prices, and then the US dollar fell, boosting the euro. On technical graphics, the daily EUR/USD is trading far below the daily moving average and is still in a downward trend, but the technical indicators are seriously oversold. On Wednesday, the euro/dollar constructed a bearish engulfing K line, indicating that the exchange rate may remain upward, but it needs to break through the strong resistance of the psychological barrier of 1.1600. In addition, the October 4th high of 1.1639 became a strong resistance for the bulls. If the EUR/USD daily line closes above 1.1600, the first test level will be the above 1.1639. If the exchange rate breaks through this level, it may test the 50-day moving average at 1.1719. On the downside, with the support of relative strength indicators and other momentum indicators, the exchange rate still maintains a downward trend. The relative strength indicator is below the midline 50. If the exchange rate falls below 1.1600, it will test the 2021 low of 1.1524.

Currency: GBP/USD



Resistance level 2: 1.3800

Resistance 1: 1.3722

Spot price: 1.3676

Support 1: 1.3570

Support 2: 1.3530

After the pound against the US dollar hit a two-week high of 1.3735 in early European trading on Thursday, profit-taking fell back to around 1.3670 in late trading. Recently, news of the British pound, which seems to be favorable, has appeared frequently. The easing of the confrontation between the UK and the European Union on the Northern Ireland Agreement has eased people’s concerns, and the pound has also gained some support for this. The European Union said on Wednesday that it will reduce customs inspections and paperwork for British products used in Northern Ireland. Earlier, the Bank of England officials signaled that interest rates are about to be raised, which greatly promoted the recent sharp rebound in the pound. On the 4-hour and daily chart, the GBP/USD exchange rate has broken the 20 moving average, and various technical indicators have developed upward, indicating that the rebound potential from 1.3412 at the end of September has not yet exhausted. If the exchange rate stays above 1.36, the targets that are expected to attack from the top will aim at water levels such as 1.37 and 1.38 respectively. The key support below is at 1.3570. If it falls below, it will indicate the end of this round of pound rebound.

Currency: AUD/USD



Resistance level 2: 0.7478

Resistance 1: 0.7425

Spot price: 0.7416

Support 1: 0.7330

Support 2: 0.7280

AUD/USD traded near 0.7410 after hitting a one-month high of 0.7426. The Australian economic data fell short of market expectations, but the stock market rose and gold prices strengthened to boost the Australian dollar. The Australian data released on Thursday morning was generally weak. Consumer inflation expectations in October were 3.6%, which was lower than the previous value of 4.4% and also lower than the expected value of 3.8%. In addition, Australia issued a report saying that it lost 138,000 jobs in September, which was weaker than expected. The unemployment rate fell to 4.6%, better than expected, but the employment participation rate shrank to 64.5%. Australia's weak economic data shows that the basic factors supporting the rise of the Australian dollar are not so solid. Looking at the short-term technical outlook of the AUD/USD, the daily chart shows that the AUD/USD remains bullish, the exchange rate continues to break through the 20 moving average, and the technical indicators are facing upwards and are in a positive zone. AUD/USD is currently converging at the continuously bearish 100 moving average. If the AUD/USD breaks through this level, the exchange rate is expected to hit the 100% retracement level and rise to the September high of 0.7477. However, on the short-term hourly chart, the technical indicators have all entered an overbought state, and care must be taken to prevent the risk of weekend profit pullbacks in the day.

Only personal views, not representative of the views of the organization

Source: Bank of China's official website, Bank of China Guangdong Branch Wang Gang, original title: "Foreign Exchange Market Watch October 15, 2021"