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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.

Forecast for the price of gold: XAU/USD bears looking for a crucial increase in US rates around CPI

Daniel Rogers

Aug 10, 2022 11:25

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As markets wait for the US inflation statistics for July, which will be released during the opening of New York, the price of gold is unchanged in Tokyo. Lower yields have helped to support the price, which helps because gold doesn't offer any interest. On Tuesday, the US 10-year note hit a new corrective low of 2.746%. Since then, they have recovered to a high of 2.816%, but this is still much below their 52-week range high of 3.497%, which was recorded in mid-June 2022.

 

The US inflation figures due out on Wednesday will likely show a level of price growth that will lead the Federal Reserve to raise interest rates further, and this is the main focus of the markets.

 

Although there will be another report before the following Federal Reserve meeting, the Fed is anticipated to increase interest rates by another 75 basis points when combined with last week's NFP report. However, officials should this time pay particular attention to core inflation. According to experts at ANZ Bank, "a continuation of recent trends would be undesirable and likely lean the Fed toward another significant rate increase at the 20–21 September FOMC meeting."

 

The market must determine whether the sticky and robust core is more significant than the slowing headline, according to TD Securities analysts. We will be short-term focused on whether this statistic disturbs resilient risk sentiment because that will also assist influence near-term USD price action. "The USD remains sensitive to US data surprises."

 

In terms of Fed forecasts, WIRP is now showing over 75% odds of a 75 bp raise at the FOMC meeting on September 20-21, which would be expected to keep the dollar in the hands of bulls. According to analysts at Brown Brothers Harriman, markets are still factoring in a swift Fed flip into an easing cycle in the first quarter of 2023. The numbers support the Fed's position that things are not as bad as they appear, at least for the time being.

 

In addition to the inflation figures, the August 25–27 Jackson Hole Economic Symposium will be closely watched before the FOMC meeting on September 20–21. The analysts at BBH explained that "by late August, we will have seen all the major July data and some of the early August surveys, such as the preliminary S&P Global PMI readings and regional Fed surveys." Fed Chairs frequently use this symposium in August to announce or hint at policy shifts ahead of the September FOMC meetings. In Q3, the Fed will also be well-aware of the state of the economy. Despite this, we do not believe the Fed will announce any significant policy changes or put itself in a precarious position before the FOMC meeting next month.

 

As a result, Jackson Hole and the CPI statistics will be crucial for gold. A higher-than-expected reading for today's inflation data could be the trigger for a final shake-out of obstinate and stale shorts inside the volatility before the next substantial move to the south. On the other side, a deeper positive correcting in gold prices would be anticipated if the US dollar were to decline on a lower reading.