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Futures news on April 3, crude oil trend fluctuated narrowly, finished product shipments weakened, fuel oil market players held prices and waited and watched, downstream orders were dominated by rigid demand after phased stocking up, and refinery shipments were lukewarm. It is expected that the overall market trading will be stable today, with a few narrow adjustments.On April 3, CICC pointed out that Trump announced "reciprocal tariffs" on April 2, which exceeded market expectations. Reciprocal tariffs use a combination of "carpet-style" tariffs and "one country, one tariff rate", covering more than 60 major economies. Calculations show that if these tariffs are fully implemented, the effective tariff rate of the United States may rise sharply by 22.7 percentage points from 2.4% in 2024 to 25.1%, which will exceed the tariff level after the implementation of the Smoot-Hawley Tariff Act in 1930. CICC believes that reciprocal tariffs may increase uncertainty and market concerns and aggravate the risk of "stagflation" in the US economy. Calculations show that tariffs may push up US PCE inflation by 1.9 percentage points and reduce real GDP growth by 1.3 percentage points, although they may also bring in more than $700 billion in fiscal revenue. Faced with the risk of "stagflation", the Federal Reserve can only choose to wait and see, and it may be difficult to cut interest rates in the short term. This will further increase the risk of economic downturn and increase the pressure on the market to adjust downward.RBA Financial Stability Assessment Report: US tariffs may have a "chilling effect" on investment and spending.RBA Financial Stability Assessment Report: Australian banks are well capitalized and can absorb large loan losses. It is important that bank lending standards remain sound. Budget pressures are prevalent among Australian households, but are expected to ease. There are concerns that low interest rates will encourage households to over-indebtedness.RBA Financial Stability Assessment: The Australian financial system is in a good position to weather a severe global recession. Most households are in good financial shape and banks have limited the risk of widespread disruption.

GBP/USD hits 1.16 because to Truss' fiscal boost and rising BOE rates

Alina Haynes

Sep 06, 2022 15:27

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GBP/USD receives bids to retest the intraday high above 1.1590 as bulls embrace Lizz Truss' leadership amid expectations of a large stimulus and a push to the Bank of England (BOE). Consequently, throughout Tuesday's Asian session, the Cable pair led the G10 currency pairs with intraday gains of 0.65%.

 

"Incoming Prime Minister Liz Truss has drafted plans to stabilize annual energy and gas costs for a typical UK residence at or below the current level of £1,971," As a result of Russia's decision to shut off gas supplies to Europe in response to sanctions imposed in response to the invasion of Ukraine, she is under pressure to find a solution to increasing energy prices that are crushing individuals and businesses in the United Kingdom.

 

After the results were revealed, Truss declared, "I will submit a solid proposal to cut taxes and stimulate the economy." According to Reuters, UK prime ministerial candidate Truss stated, "I would resolve the energy crisis by tackling people's energy prices and our long-term energy supply problems."

 

Aside from that, her criticism of the BOE's slow response to the fight against inflation is well-known, which suggests that the "Old Lady," as the UK's central bank is often known, will increase interest rates more quickly.

 

The dollar's loss also contributes to the GBP/USD recovery, it should be noted. Despite this, the US Dollar Index (DXY) fell 0.35 percent to 109.43 at press time, failing to justify higher US Treasury yields. In doing so, the dollar index versus the six major currencies extended its drop from yesterday's 20-year high.

 

The decrease in the DXY may also be attributable to the market's cautious optimism, as indicated by mildly optimistic stock futures, in anticipation that global authorities will be able to address the energy crisis. The recent reduction in hawkish Fed predictions, particularly in the wake of Friday's mixed US employment report, provides additional support for the GBP/USD recovery.

 

Alternatively, according to data released by payments provider Barclaycard on Tuesday, a decrease in Consumer Spending investigates the bears. The Financial Times said that "UK consumers cut spending on clothing, home improvement, and cosmetics in August, while business activity declined, a symptom of "collapsing" demand due to the escalating cost of living crisis" (FT).

 

Amid crowded markets, risk catalysts are likely to occupy pair traders in the future. Also essential will be the ISM Services PMI for August, which is predicted to be 55.5 as opposed to the prior reading of 56.7.

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