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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.

USDJPY rises 1.0% to offset US inflation-driven fall above 142.00; US Michigan CSI expected

Alina Haynes

Nov 11, 2022 17:57

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During the Asian session on Friday, USDJPY bounces at the intraday high near 142.50 as it consolidates the worst daily decline since October 1998. In doing so, the yen pair takes signals from the market's slightly bearish sentiment and the lack of movement in US Treasury yields during the day.

 

Nonetheless, fears of coronavirus return as Beijing, China reports the highest daily spike in covid infections in over a year. For the first time in seven months, the number of daily coronavirus cases exceeded 10,000 at the national level. Aside from this, 10-year US Treasury rates remain quiet near the monthly low near 3.81%, which was flashed on Thursday after the sharpest decrease since the start of December 2021.

 

Bond market inaction may be related to U.S. and Canadian bank holidays, as well as the market's demand for greater confirmation of the Federal Reserve's decision to suspend rate hikes (Fed).

 

It should be highlighted that increased fears of Japan's involvement in the currency market to defend the yen, the Bank of Japan's (BOJ) defense of the cheap money policy, and optimism for an economic recovery in the next years all contribute to the USDJPY resurgence.

 

Thursday, the US Consumer Price Index (CPI) for October surprised markets by slipping to 7.7% YoY, the lowest level since March of last year, compared to forecasts of 8.0% and a previous reading of 8.2%. Importantly, the Core CPI fell to 6.3% from 6.5% and earlier readings of 6.6%.

 

The president of the Dallas Federal Reserve, Lorie Logan, indicated that the October CPI inflation report is a welcome respite and that it may soon be time to slow the rate of rate hikes. Patrick Harker, president of the Federal Reserve Bank of Philadelphia, told Reuters on Thursday that the US Federal Reserve may slow its rate hikes in the coming months. Esther George, president of the Federal Reserve Bank of Kansas City, Loretta Mester, president of the Federal Reserve Bank of Cleveland, and Mary Daly, president of the Federal Reserve Bank of San Francisco, have all recently advocated for moderate rate hikes at upcoming meetings.

 

As a result, the CME's FedWatch Tool shows an 80% chance of a 50 basis point (bps) rate hike in December, up from about 55% shortly after the Fed's meeting last week.

 

Given recent forecasts for an easy Fed rate hike in December and the BOJ's preference for dovish monetary policies, the USDJPY pair is likely to continue falling. The initial readings of the US Michigan Consumer Sentiment Index (CSI) for November, which is expected to be 59.5 compared to 59.9 in October, will precede the meeting between US President Joe Biden and Japan's Prime Minister (PM) Fumio Kishida on Sunday in order to provide clear direction.

 

Due to the oversold RSI conditions, USDJPY bears are challenged by an ascending support line from early March and the 100-day moving average (DMA) in the vicinity of 141.00-140.85. The comeback must surpass the late-October swing low of 145.10 to impress buyers.

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