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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.

USD/CHF Continues Fed-Induced Declines Toward 0.9020 Support; Central Banks and US NFP in Focus

Daniel Rogers

Feb 02, 2023 16:13

During Thursday's Asian session, USD/CHF remained depressed at the lowest levels since August 2021 as bears enjoy a three-day slump near 0.9065. The Swiss Franc (CHF) pair extends its losses triggered by the US Federal Reserve as market participants expect the main central bank decision and January employment statistics.

 

The USD/CHF retested a multi-day low the day before in response to dismal US data and the Fed's dovish rate hike.

 

Despite the fact that the Fed matched market expectations by raising the benchmark rate by 0.25 percentage points, the statement that inflation "has eased but remains high" impacted on the U.S. currency.

 

Fed Chair Jerome Powell's statement that "We may pronounce that a deflationary process has begun" contributed to the depreciation of the US usd. In addition, the policymaker acknowledges the need for a rate cut by the end of 2023 if inflation decreases much faster than projected. Powell of the Federal Reserve stated that a couple more rate hikes are still required to achieve this.

 

Elsewhere, the US ISM Manufacturing PMI dropped to its lowest level since June 2020, reaching 47.4 in January compared to the forecasted 48.0 and the prior reading of 48. In addition, the ADP Employment Change dropped to a one-year low with 106K, compared to the 178K market forecast and the upwardly revised previous figure of 253K. In contrast, the number of JOLTS Job Openings grew to 11.01 million in December, exceeding both the average estimate of 10.25 million and the previous figure of 10.44 million.

 

Wall Street soared against this backdrop as 10-year US Treasury yields fell the most in two weeks. Note that benchmark interest rates are licking their wounds near 3.41 percent, while S&P 500 Futures are showing slight increases as of press time.

 

Prior to the monetary policy meetings of the European Central Bank (ECB) and the Bank of England, USD/CHF traders should pay attention to market movements affected by these central banks (BoE). However, significant attention should be paid to Friday's US Employment report. Nonfarm Payrolls (NFP), which is expected to decline to 185K from 223K earlier, will be an important indicator to track.


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