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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 drops to 0.6440 due to New Zealand's weakness Pre-Fed warning probes bears: HYEFU, RBNZ

Alina Haynes

Dec 14, 2022 11:36

NZD:USD.png 

 

In order to justify a new intraday low of 0.6440 on Wednesday morning, the New Zealand dollar (NZD/USD) points to New Zealand's (NZ) poor Half Year Economic and Fiscal Update (HYEFU). The Reserve Bank of New Zealand's (RBNZ) statements and the cautious atmosphere leading up to the important Federal Open Market Committee (FOMC) monetary policy meeting, however, have put a damper on recent pair selling.

 

According to Reuters, the New Zealand Treasury expects the Gross Domestic Product (GDP) to increase at a negative rate for three quarters of the current fiscal year 2023. (CY23). Additionally, according to the report, New Zealand will have a budget deficit of NZ$3.63 billion ($2.34 billion) for the fiscal year that ends on June 30, 2023, which is lower than the NZ$6.63 billion deficit forecast in the country's budget released in May.

 

The RBNZ crossed wires through Reuters after the negative announcements, saying that "Even with the predicted decline in the period ahead, it is envisaged that the level of employment will remain strong." The central bank of New Zealand also stated that both the current and expected rates of inflation must be kept under control.

 

However, it should be noted that recent worries coming from China, mostly because of internal and external pessimism on the Covid situation, seem to favor the NZD/USD to hold its gains from the previous day. The latest spike in daily Covid cases has led International Monetary Fund (IMF) Managing Director Kristalina Georgieva to predict worse economic development for China. Additionally, Bloomberg stated that the COVID-19 outbreak caused the Chinese leadership to cancel the discussion on economic policy. In 2023, the Asian Development Bank (ADB) revised down its estimate of China's GDP growth from 4.5% in September to 4.3%.

 

After the US Consumer Price Index (CPI) for November dropped to 7.1% from 7.3% and 7.8% earlier, the US Dollar Index (DXY) decreased on Wednesday. Additionally, the Core CPI, also known as the CPI excluding food and energy, fell to 6.0% YoY during the designated month, below both market forecasts of 6.1% and previous readings of 6.3%. "Traders of futures tied to the Federal Reserve's policy rate upped their bets that the U.S. central bank will delay its interest-rate increase pace further in the first quarter of 2019," according to Reuters, after the release of the data.

 

In light of this, Wall Street ended the day up, but the S&P 500 Futures lack a clear trend. Additionally, US Treasury bond rates haven't changed in three days despite dropping to their lowest level in a week.

 

Future NZD/USD price movement may be constrained by pre-Fed concerns, although bears may sustain optimism at the multi-day high if they expect a surprise hawkish Fed action.

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