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August 20th - According to sources, the Trump administration is preparing to lower tariffs on imported Canadian cars from 25% to 15% as part of a broader agreement. Under this agreement, Canada would remove retaliatory trade measures imposed on the United States. Last year, the White House imposed a 25% tariff on foreign-made cars and trucks. For vehicles manufactured in Canada and Mexico, this tariff applied only to non-U.S. components, a move aimed at encouraging companies to move more production to the United States. Sources say the new 15% tariff rate will also use this "non-U.S. component" calculation rule. The specific details of the agreement have not yet been finalized. Furthermore, Trump has a history of last-minute changes to trade agreements, even canceling them altogether, just before a deal is reached, so the final outcome remains uncertain.Mayor of Kyiv: Kyiv is under attack by ballistic missiles.August 20th - As US government borrowing increases at an unprecedented rate, the total US national debt has surpassed $40 trillion. Despite Trumps promises to control government spending, the ever-expanding debt continues to raise concerns among investors about the state of US public finances. According to data released by the US Treasury Department on Wednesday, the total US federal debt surpassed the $40 trillion threshold on Tuesday. In the past year, its debt has increased by $3 trillion, the fastest growth rate in history excluding the pandemic period. "Its like a huge warning light on a car engine," said Mark Godwin, senior policy director at the Committee on a Responsible Federal Budget. "It doesnt mean the engine will burn out tomorrow, but its a clear signal that things are out of control. The problem isnt just the sheer size of the debt, but the speed at which weve reached this level." Over the past two decades, US national debt has risen dramatically, climbing from less than $6 trillion at the beginning of the century to its current level. Massive public spending during the financial crisis and the COVID-19 pandemic exacerbated the widening budget deficit. In the past decade alone, the overall debt has doubled. The Congressional Budget Office projects that the ratio of publicly held federal debt to GDP will exceed the historical peak of 106% set in 1946 after World War II around 2030, and will further climb to 120% by 2036.According to Al Jazeera: A U.S. State Department spokesperson said the Trump administration has begun discussions on Syrian sovereignty and Israels right to self-defense.On August 20th, the U.S. Commodity Futures Trading Commission (CFTC) is soliciting public comments on computing power futures contracts as industry giants begin to accept computing power as a tradable asset. Several exchanges, including the CME Group, Intercontinental Exchange (ICE), and emerging fintech company Architect Financial Technologies, have announced plans to launch related contracts after obtaining regulatory approval. These exchanges stated that establishing a computing power futures market would help end-users and speculators hedge against risks related to energy shortages or other issues that could impact the technological progress of AI developers. CFTC Chairman Michael Selig stated in a statement on Wednesday, “The U.S. cannot win the AI race without a robust computing power derivatives market. This comment period is the first step in establishing clear rules for the U.S. computing power market.” One of the issues addressed in the CFTCs comment period is how computing power futures differ from other types of derivatives or underlying commodities that the agency already regulates. Allowing computing power futures to be listed on CFTC-regulated exchanges may require further standardization of variables affecting computing power prices, including price indices used for settlement references.

EUR/USD Expects Fourth Weekly Gains Above 1.0900 Despite The US Dollar's Rebound Advance Ahead Of US NFP

Daniel Rogers

Apr 07, 2023 11:42

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Despite a recent retreat, the EUR/USD bulls maintain control around 1.0920. This reflects the typical Good Friday inactivity and apprehension ahead of the US Nonfarm Payrolls (NFP) report released early in the day. The major currency pair was volatile on Thursday as a result of the US Dollar's initial rebound on fears of a recession, but ended the day unchanged as disappointing US data contrasted with stronger Eurozone data.

 

Fears of a recession in the world's largest economy were prompted by consecutive lackluster US data and falling US Treasury bond yields, giving USD bears a reprieve on Thursday morning. As traders prepared for the all-important NFP, the dollar's subsequent gains were reversed by another disappointing US employment report.

 

Despite this, US Initial Jobless Claims for the week ending March 31 rose to 228K from 200K anticipated and an upwardly revised 246K the prior week. Notable is the increase in Challenger Job Cuts from 77,77K to 89,703K in the given month.

 

Notably, Reuters fanned fears of a recession by citing the most recent decline in the preferred bond market indicator of Federal Reserve (Fed) Chairman Jerome Powell. The most reliable bond market indicator of an imminent economic contraction, according to Federal Reserve research, is the "near-term forward spread" between the forward rate on Treasury bills 18 months from now and the current yield on three-month Treasury bills.

 

According to Reuters, International Monetary Fund (IMF) Managing Director Kristalina Georgieva stated in prepared remarks on Thursday that the global economy is projected to expand by less than 3% in 2023, a decrease from 3.4% in 2022.

 

In other news, Germany's Industrial Production (IP) increased 0.6% year-over-year in February, versus market predictions of -2.7% and previous readings of -1.7%. Additionally, the monthly figures exceeded expectations by 0.1%, coming in at 2.0% compared to 3.7% previously. On Wednesday, Germany Factory Orders for February improved to -5.7% YoY from -12.0% previously revised down and -10.5% market expectations, while MoM growth came in at 4.8% compared to 0.3% expected and 0.5% previous readings.

 

Wall Street and US Treasury bond yields have both reduced weekly losses as a result of these strategies, but investors remain skeptical.

 

In the context of less liquidity surrounding the March US employment report, sporadic activity on the major markets can keep the EUR/USD inactive and prone to abrupt price swings. Notable is the fact that recent dovish Fed forecasts and disappointing US data generate expectations for a positive surprise and enormous price volatility thereafter.


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