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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.

EUR/USD Accurately Reflects Pre-Fed Anxiety Below 1.0800, Per Lagarde Of The ECB

Daniel Rogers

Mar 22, 2023 14:52

EUR:USD.png 

 

Following a four-day uptrend, EUR/USD fluctuates between 1.0760 and 1.0770 on the day of the Federal Reserve (Fed) decision as supporters halt at the highest levels in five weeks. The Euro-U.S. dollar exchange rate reflects the market's caution ahead of key catalysts, as well as traders' indecision in the aftermath of the recent upswing in sentiment and Treasury bond yields, as well as hawkish central bank bias.

 

Following several days of risk aversion, global markets exhaled a murmur of relief on Tuesday as the market accepted US policymakers' efforts to contain the banking crisis.

 

As one of the most significant developments, Treasury Secretary Janet Yellen's statement that "Treasury, Fed, and FDIC actions reduced the risk of additional bank failures that would have imposed losses on the deposit insurance fund" garnered significant attention.  Bloomberg reported earlier on Tuesday that "US officials are examining ways to temporarily expand Federal Deposit Insurance Corporation (FDIC) coverage to all deposits, a move sought by a coalition of banks arguing it is necessary to prevent a potential financial crisis."

 

Not only US policymakers, but also ECB policymaker Martins Kazaks and Switzerland's Banking Association Chairman, Dr. Marcel Rohner, attempted to convince the markets that their respective banking systems are not imminently in danger of collapsing.

 

Recently, the news that US policymakers are considering methods to circumvent the US Congress in order to protect the banks coincided with speculations that the First Republic Bank is seeking government assistance in order to encourage EUR/USD traders to purchase the currency pair.

 

Contradictory data from Europe and the United States challenges pair traders at the beginning of the most important trading day.

 

Tuesday, Germany's ZEW Economic Sentiment Index decreased to 13.0 for March from 28.1 in February, compared to the market's expectation of 16.4, while the Current Situation index came in at -46.5 for the month, versus -45.1 previously and -45.8 analysts' expectations. Notable is the fact that the ZEW Economic Sentiment Index for the Eurozone dropped to 10.0 in March from 29.7 in the previous reading and market expectations of 23.2.

 

In contrast, US Existing Home Sales increased by 14.5% in February, compared to the 0.0% expected and the -0.7% recorded previously. However, the Philadelphia Fed Non-Manufacturing Business Outlook survey index dropped to -12.8 in March, dampening subsequent US Dollar-related optimism.

 

S&P 500 Futures remain lackluster despite Wall Street's optimistic close, and benchmark US Treasury bond yields struggle to extend a two-day rebound from the lowest levels since September 2022. The yields on 10-year and 2-year US Treasury bonds fluctuate around 3.60 percent and 4.18 percent, respectively, as of press time.

 

Ahead of the crucial Federal Open Market Committee (FOMC) monetary policy meeting, Christine Lagarde's comments could provide EUR/USD traders with amusement.

 

Noting that a 0.25 basis point rate hike is almost certain, EUR/USD skeptics should keep an eye out for hawkish developments in the dot plot and remarks to defer banking turmoil in Fed Chair Jerome Powell's speech.