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On May 31, the Colombian Ministry of Foreign Affairs issued a statement on May 30, local time, stating that in response to the Ecuadorian governments earlier announcement that it would stop imposing a "safety tax" on Colombian goods, Colombia would lift its trade retaliatory measures against Ecuador and promote the normalization of bilateral economic and trade relations.May 31 - A Bloomberg survey of economists median forecast indicates that the U.S. unemployment rate will remain unchanged at 4.3% in May, while nonfarm payrolls will increase by 89,000. This increase would push the three-month average job growth rate to its highest level in over a year, sparking discussions about a continued acceleration in hiring. Forecasters expect the healthcare sector to maintain its strong momentum, while cyclical sectors such as construction, leisure, and hospitality will also see a recovery, with demand in these sectors likely benefiting from the warm weather of the past month. Manufacturing employment may also be boosted as consumers stockpile goods in anticipation of potential price increases following a potential conflict with Iran.On May 31, according to Iranian state television, Saeed Ajorlou, a member of Irans Media Committee, stated on Saturday that Tehran had not yet approved the final draft of the proposed agreement with the United States, and warned that Iran might withdraw from the agreement if the US failed to fulfill its commitments. In an interview, Ajorlou said that to his knowledge, as of Friday evening, the final text had not been approved, but the differences between the two sides were minimal. He stated, "If the final text is approved, we will enter a 60-day phase of detailed consultations," adding that each of the 14 articles of the agreement contains annexes that require further negotiation. Ajorlou emphasized that the implementation mechanism is more important than the text itself, especially regarding the acquisition of Iranian assets and the fulfillment of commitments by the other side. He stated that the proposed agreement includes a clause allowing Iran to withdraw from the agreement if the other side fails to fulfill its commitments. He indicated that Iran could withdraw from the agreement if violations occur, including breaches of the ceasefire agreement, failure to grant access to Iranian funds, or failure to lift the naval blockade. He added that if commitments are not fulfilled in the initial phase, Iran will reconsider its participation in the proposed 60-day negotiations.The Indian government stated that the current consumption tax rates for gasoline and diesel consumed domestically will remain unchanged.On May 31, local time, Ibrahim Rezaei, spokesman for the Iranian Parliament’s National Security and Foreign Policy Committee, said on May 30 that the naval blockade against Iran “will eventually end, whether through negotiations or military action.”

The release of Fed Minutes has resulted in a decline in interest rates, sending the US Dollar Index down to 106.50

Alina Haynes

Aug 18, 2022 11:20

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In an effort to consolidate weekly gains, the US Dollar Index (DXY) is trading near its intraday low of 106.50 again during Thursday's Asian session. On Monday and Wednesday, the value of the greenback rose sharply due to recession worries and higher interest rates, but dropped again after the release of the Fed Minutes.

 

According to Reuters's analysis of minutes from the current Federal Open Market Committee (FOMC), officials indicated a willingness to decrease the pace of interest rate hikes in response to signs of a slowdown in inflation. Fed members said in the minutes from their July meeting, which were posted on Wednesday, that the pace of future rate hikes would depend on new economic data and evaluations of how the economy was adapting to the rate hikes that had already been approved.

 

At press time, the yield on the 10-year US Treasury note had dropped one basis point (bp) from its prior week's high near 2.90 percent after the release of the Fed Minutes.

 

Expectations of further stimulus from China also looked to have reduced demand for safe havens, which put downward pressure on US bond rates alongside the FOMC Minutes. China may issue an additional 1.5 trillion yuan in debt as part of an investment push, according to china securities news. However, risk aversion appears to remain on the table due to concerns over China's ability to overcome fears of a recession, especially in the wake of the covid issues and hot wave.

 

New statements from the Office of the United States Trade Representative suggest that formal negotiations between the United States and Taiwan may begin on a trade initiative in early fall of this year, which may exacerbate existing concerns.

 

Prior to the announcement of the US Retail Sales report for July, bond coupons rose. U.S. retail sales increased by 0.0% in July, missing the 0.1% mark economists had predicted and revising down the 0.8% gain seen in June. However, the Retail Sales Control Group estimates improved, going from 0.6% (the market consensus) to 0.8% (the updated figure).

 

Fed Governor Michelle Bowman made a similar point, saying "High inflation and robust employment will undoubtedly exert some pressure on the labor and employment markets."

 

In August, DXY traders may find entertainment in the weekly announcements of US Initial Jobless Claims and Philadelphia Fed Manufacturing Survey. The most crucial things to keep an eye on for fresh impetus are recession worries and Fed worries.

 

DXY bears are being encouraged to retest the 106.20 21-day moving average (DMA) support by the formation of a double top near 106.95.


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