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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.

GBP/USD regains 1.18 thanks to a weaker DXY ahead of Jackson Hole and secondary US economic data

Daniel Rogers

Aug 25, 2022 14:53

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During Thursday's Asian session, the GBP/USD retests its intraday high at 1.1815 while consolidating its weekly losses in response to a dollar decline. The most recent increases in the cable pair could also be linked to expectations that the next British government will be more organized and assertive.

 

The Resolution Foundation, a UK think tank, told Reuters on Thursday that Britain's next prime minister must implement radical ideas, such as discounted power prices, energy bill freezes, or a "solidarity" tax increase for higher incomes, to cushion the energy price shock for a significant portion of households.

 

Ex-Chancellor Rishi Sunak's support for the Bank of England (BOE) and preparations for spending cuts and power bill management kept GBP/USD buyers upbeat. Sunak's chances of becoming Prime Minister of the United Kingdom are enhanced by his moderate pro-Brexit attitude and his financial expertise, especially in the midst of fears of a recession.

 

In contrast, the US Dollar Index (DXY) opened Wednesday on a higher footing before retreating to 108.50, down 0.15 percent as equity markets reduced recent losses in the absence of exceptionally positive US data. Inconsistency in the most recent Fedspeak and market chatter on whether Fed Chair Powell will emphasize his economic concerns at the Jackson Hole Symposium or refrain from making unduly aggressive remarks added to the dollar index's decline against the six major currencies.

 

The July data for US Durable Goods Orders was 0.0%, which was below the predicted 0.6% and the significantly lowered 2.2% estimate from the previous month. However, Nondefense Capital Goods Orders excluding Aircraft above the 0.3% market consensus to achieve 0.4%, up from 0.9% earlier. In July, Pending Home Sales improved to -1.0% MoM from -4.0% expected and -8.9% before (revised down from -8.9%). Annually, the fall in Pending Home Sales was 19.9%, which was less than the prior annual decline of 20%.

 

US 10-year Treasury rates reached a two-month high of roughly 3.10%, the highest level in a week, while Wall Street benchmarks showed moderate increases, allowing S&P 500 Futures to remain somewhat bullish at around 4,150 as of the most recent update.

 

Future calendars will feature the second edition of the US GDP for the second quarter alongside the US Personal Consumption Expenditure (PCE) for the designated period. For new efforts, Jackson Hole will receive the most attention. Morgan Stanley has indicated in its study that the gloomy GDP outlook continues to weigh on the British pound. We do not predict a big decline in GBP from here, despite the fact that GDP projections are already bleak and GBP sentiment is negative.

 

Buyers need confirmation from June's low of 1.1933 to take control of the GBP/USD pair. GBP/USD bears look to be losing momentum at the multi-month bottom, but buyers need confirmation from June's low of 1.1933 to reclaim control.


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