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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 19: technical analysis of the euro, the pound and the Australian dollar

LEO

Oct 26, 2021 10:52

Currency: EUR/USD



Resistance 2: 1.1680
Resistance 1: 1.1640
Spot price: 1.1619
Support 1: 1.1595
Support 2: 1.1525

The US dollar was weak during the US session, and the euro/US dollar traded near the intraday high of 1.1610. US economic data was weaker than expected, and US stocks performed better after falling European and Asian stock markets, boosting the euro/dollar. At present, the focus of the market is still on the yield of U.S. Treasuries, which is the most concerned indicator of inflation pressure in the market. The 10-year U.S. Treasury yield once hit a high of 1.627%, but then quickly fell below 1.60%, further increasing the weakness of the dollar at the close. On the daily chart, the bullish momentum for the euro/dollar is still limited. The stable and bearish 20 SMA constitutes resistance, while the large-level moving average maintains a bearish tendency and is above the short-term moving average. The kinetic energy of technical indicators is not balanced. They are regaining lost ground, but remain in the negative zone, indicating that the exchange rate will consolidate rather than bottom out. The 4-hour chart shows that the EUR/USD is above the 20SMA and 100SMA, and the short-term moving average is about to cross the long-term moving average. The kinetic energy indicator was flat near the midline, and the relative strength indicator fell from the intraday high and is still above the midline. If the euro/dollar breaks through 1.1640, the exchange rate may continue to rise, if the euro/dollar breaks below 1.1595, the short position may increase.

Currency: GBP/USD



Resistance 2: 1.3820
Resistance 1: 1.3750
Spot price: 1.3744
Support 1: 1.3690
Support 2: 1.3640

Data show that the monthly rate of retail sales in the United States in September was the same as the previous value, an increase of 0.7%, unexpectedly better than expected -0.2%, and the previous value was revised up from 0.7% to 0.9%. The monthly rate of core retail sales increased by 0.8%, which was also better than expected 0.5%. The beautiful data and the impressive performance of Bank of America's earnings report that week boosted market risk appetite. Among the risky currencies, the pound is clearly the leader, because the UK's interest rate hike expectations are constantly rising. However, it is still under the pressure of the downward trend line since the high point of the year. The daily chart regained the ground lost earlier with the big Yang line, and the recent rebound has been strong. However, the current test of the downward trend line since the July 30 high is still cautious about further upwards. The 4-hour chart broke through the previous day's callback high, but the stochastic indicator diverged bearishly. The hourly chart oscillates ascending short-term and there is a callback signal above 1.3770. Only above 1.3820 is above the breakthrough, which shows a clear upward trend.

Currency: AUD/USD



Resistance level 2: 0.7478
Resistance 1: 0.7440
Spot price: 0.7424
Support 1: 0.7385
Support 2: 0.7330

The weekly chart shows that the AUD/USD seems to be preparing to continue the upward trend. The AUD/USD has expanded its rebound from the flat 100 SMA, and was above the bearish 20 SMA last week. At the same time, the technical indicators remain upward, about to cross the midline and enter the positive zone.

The daily chart shows that the AUD/USD may be close to finishing down. AUD/USD is currently trading directly above the mildly bearish 100 SMA, while the technical indicators are near the overbought indicators, losing bullish momentum. AUD/USD faced strong resistance at the monthly high of 0.7477 in September. If AUD/USD breaks through the resistance, it will approach the 0.7600 area. In addition, if the AUD/USD drops below 0.7330 and falls to the 0.7200 area, the AUD/USD will turn bearish.

Wang Gang, Bank of China Guangdong Branch

Source: Bank of China official website

Original Title: Forex Market Watching on October 19, 2021