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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 the Fed in the Spotlight, EUR/USD steadily climbs above 1.0600 prior to European Retail Data

Alina Haynes

Mar 06, 2023 14:46

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As negative sentiment and conflicting concerns about the Federal Reserve's (Fed) and European Central Bank's (ECB) next move combine, EUR/USD falls to 1.0630, posting minor losses after a notable weekly gain. In light of the crucial week's sluggish start, it is essential to observe that a light schedule in Asia also tests pair traders.

 

However, the robust inflation figures for the Eurozone back hawkish ECB comments. The US data, however, falls short of its European equivalent and casts doubt on the aggressive Federal Reserve (Fed) worries.

 

Botjan Vasle, a member of the Governing Council of the European Central Bank (ECB), stated on Friday, "My personal opinion is that the increase we intend for our March meeting—that is, 0.5 percentage points—will not be the last." In a similar vein, ECB Governing Council member Madis Muller stated on Friday that "it is probably not the ultimate increase in March." However, ECB Vice President Luis de Guindos stated, "Data-dependent interest rate trajectory after March."

 

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, rekindled concerns about the Fed's policy reversal when he stated, "The central bank may be able to suspend the current tightening cycle by mid- to late summer."

 

On the other hand, Mary Daly, president of the Federal Reserve Bank of San Francisco, told Reuters over the weekend that if inflation and labor market data continue to come in hotter than expected, interest rates will need to rise and remain there longer than Fed policymakers anticipated in December.

 

In its semi-annual Monetary Policy Report, the US Federal Reserve stated unequivocally that "continuous increases in the Fed funds rate target are essential." According to the article, the Fed is unwaveringly committed to returning inflation to 2%.

 

In terms of the data, resilient February readings for the Producer Price Index and the Harmonized Index of Consumer Prices (HICP) for the Eurozone validated the hawkish posture of ECB officials, allowing the EUR / USD to maintain its firmer position. Despite the first US Treasury bond rates, the US data disappoints the US Dollar, which weakens the USD/EUR exchange rate. Despite this, the US ISM Services PMI for February was 55.1, compared to market estimates of 54.5 and predictions of 55.2. Prior to that week, the Conference Board's (CB) Consumer Sentiment survey and January's US Durable Goods Purchases both indicated weakening trends.

 

Aside from EU-US catalysts, news from China's annual session of the National People's Congress (NPC) appears significant and has recently impacted the risk profile and EUR/USD exchange rate. According to the most recent report, the dragon nation anticipates a modest growth rate of 5.0% this year, compared to market expectations of 6.0%. In addition, concerns regarding China and Russia have a negative effect on sentiment and the EUR/USD exchange rate.

 

The EUR/USD pair's ability to move rapidly is hampered by the cautious environment that has developed ahead of Federal Reserve (Fed) Chairman Jerome Powell's semi-annual testimony, the US employment report for February, and today's Eurozone Retail Sales for February. If the bloc's data come in at 1.9% YoY, as opposed to the optimistic forecasts of -2.8%, the price may recover the most recent losses.