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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.

NZD/USD Remains Under Pressure Around 0.6250 Amid Good Friday Holiday, With US NFP Data In Focus

Alina Haynes

Apr 07, 2023 11:47

NZD:USD.png 

 

During the inactive Asian session on Good Friday, the NZD/USD maintains losses near 0.6245-40. The New Zealand traders take a breather after the price dropped the most in a month the day before. In addition to the lack of liquidity induced by the holidays, the cautious tone preceding the March US employment data also impedes the immediate movement of the quote.

 

The recent decline in price may be attributed to the market's pessimism regarding the health of the world's largest economy, the United States, as well as fears of contagion. Notably, the Fed's diminishing hawkish bets prevent the US Dollar from bolstering the risk-averse sentiment.

 

Nonetheless, fears of a recession increased after US Initial Jobless Claims improved to 228K for the week ending March 31, compared to the expected 200K and the upwardly revised 246K from the previous week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Since the outset, US data have been negative, especially in terms of employment and economic activity, fueling fears of a decline. Previously, US JOLTS Job Openings dropped to a 19-month low in February, and March's ADP Employment Change figures of 145K were also disappointing to markets. In addition, the US ISM Services PMI for March decreased to 51.2 from 54.5 previously and 55.1 expected.

 

In addition to US data, the Federal Reserve's (Fed) preferred economic indicator specifies recession concerns, which impact the NZD/USD exchange rate. The 'near-term forward spread,' which compares the forward rate on Treasury bills 18 months from now to the current yield on three-month Treasury bills, is the most reliable bond market indicator of an impending economic contraction, according to Fed research.

 

Domestically, the Reserve Bank of New Zealand (RBNZ) defies the prevailing trend of suspending rate hikes and rather surprises the markets by increasing the benchmark rate by 0.50 percentage points. In response to the aforementioned negative catalysts, traders became more skeptical of the NZD/USD pair's prior rally and subsequently inundated the pair with additional strength.

 

Benchmarks on Wall Street are nursing their wounds, while 10-year and 2-year US Treasury bond yields remain under pressure despite recent consolidation around 3.30 percent and 3.83 percent, respectively. Despite this, S&P 500 Futures experience modest losses amidst inactive markets.

 

Given the pause in market activity caused by the holidays, today's US employment report may cause wild market fluctuations, especially in light of recent recession fears and dismal US data. The market expects the primary Nonfarm Payrolls (NFP) number to be 240K, down from 311K previously, and the unemployment rate to remain unchanged at 3.6%.


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