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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.

With Weakening Oil Price And Negative Sentiment, USD/CAD Bulls Approach Monthly Barrier Around 1.3480

Daniel Rogers

Feb 17, 2023 14:36

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USD/CAD surpasses 1.3450 on Friday morning as bulls hold control for a fourth consecutive session on broad US Dollar strength and falling WTI crude oil prices. In doing so, the Loonie pair validates the dovish language of Bank of Canada (BoC) officials in contrast to the hawkish discourse of Federal Reserve (Fed) policymakers and favorable US statistics.

 

Recently in Asia, BoC Deputy Governor Paul Beaudry noted, "The floating Canadian dollar allows the bank to chart a different route than its trading partners and to focus on setting interest rates." The same confirms the dovish perspective of the Canadian central bank, as BoC Governor Tiff Macklem previously confirmed when he declared on Thursday, "There are indications that our interest rate increases are beginning to cool demand and restore equilibrium to our overheated economy.

 

In contrast, Loretta Mester, head of the Cleveland Fed, alluded to recession concerns while repeating her past support for the highest interest rates. James Bullard of the Federal Reserve Bank of St. Louis noted, "Continued policy rate increases can help lock in a disinflationary trend in 2023, notwithstanding continuing expansion and solid labor markets, by maintaining low inflation expectations."

 

Since June, when it rose 0.7% month-over-month, the US Producer Price Index (PPI) for January has gotten the most attention from USD/JPY purchasers. The improvement in US Initial Jobless Claims for the week ending February 10 (194K as opposed to 200K expected and 195K previously) was also positive for the pair. In contrast, the fall in Housing Starts in January and the Philadelphia Fed Manufacturing Survey in February appear to have received attention.

 

At the time of writing, the price of WTI crude oil had registered small gains and reduced weekly losses to approximately $78.40. Given Canada's reliance on WTI exports, the weekly decrease in the price of black gold is positive for USD/CAD bulls.

 

The USD/CAD currency rate is influenced by geopolitical issues in addition to central bank debates, US statistics, and Oil's movement. But, the recent escalation of tensions between the United States and China, as well as Russia's refusal to back down from its attack on Ukraine, weigh on risk appetite and drive the Loonie-Dollar pair due to safe-haven demand for the Dollar. During an interview with NBC News, Vice President of the United States Joseph Biden launched shots at his Chinese counterpart and expressed his hopes for a chat with the Chinese leader. I believe that fundamentally severing connections with the United States and myself is the last thing Xi would desire "President Biden cited Reuters in his statement.

 

As a result of these tactics, 10-year US Treasury note rates have reached their highest level since December 30, 2022, climbing 3.5 basis points to 3.87 percent as of press time. In a similar vein, the rates on two-year US Treasury bonds end Thursday around 4.64 percent, the highest level since November 2022, and reach 4.65 percent at the absolute latest. In addition, Wall Street closed in the red, while intraday S&P 500 Futures declined 0.30 percent as of press time.

 

Although the Oil price licking its wounds, the risk-averse mindset and hawkish Fed statements, in contrast to the dovish BoC, can keep the USD/CAD pair firmer.


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