According to informed sources, US officials seeking to negotiate global trade agreements have not made efforts to incorporate monetary policy commitments into the agreements.
The foreign exchange market is on edge amid concerns that President Donald Trump’s administration is seeking to devalue the US dollar and may use trade negotiations to achieve that goal. On Wednesday, the South Korean won rose nearly 2% against the US dollar, and the Japanese yen also climbed. Earlier this month, the New Taiwan dollar saw its biggest gain against the US dollar in decades.
The source said that Treasury Secretary Steven Mnuchin is the only member of the Trump administration’s economic team responsible for handling these issues, and he will not delegate other officials to conduct monetary policy reviews with trading partners. The source added that negotiations on these issues will only take place when Mnuchin is present.
Since Trump took office, the US dollar has fallen by about 8% against world currencies on the whole. For a long time, President Trump has been complaining that other countries, especially Asian countries, deliberately keep their currencies undervalued to gain a commercial advantage over the United States. His administration has imposed tariffs on most countries around the world and is now conducting trade negotiations with many countries, hinting that it may lift these tariffs.
“There is no doubt that the market is in a state of tension,” said Gregory Faranello, head of U.S. rates trading and strategy at AmeriVet Securities. “The current extreme volatility is caused by trade uncertainty.”
Daiju Aoki, the regional chief investment officer of UBS SuMi Trust Wealth Management in Tokyo, said that one reason is that the wealthiest families in Japan are still haunted by the market crash in the early 1990s. They have a large amount of cash in their bank accounts, but the value of this cash is shrinking as inflation rises.
“Many wealthy clients are extremely worried about the depreciation of the yen. Due to economic weakness and insufficient industrial investment, it is realistic for the yen to depreciate to 180 or 200,” Aoki said in an interview at the firm’s Tokyo office. Although Trump’s erratic trade policy remarks have disrupted the yen’s movement in the short term, these levels could be reached “in the next economic cycle.”
A report by Nomura Research Institute shows that the financial assets held by wealthy families in Japan are typically lower than those of wealthy families overseas. Among high-net-worth families with assets of at least 100 million yen (685,000 US dollars), about 70% have less than 500 million yen. In contrast, according to a report by Hiroji Noguchi of NRI in December 2023, 57% of the world’s wealthy individuals hold more than 5 million US dollars in financial assets.
Aoki said that the yen’s exchange rate needs to fall by more than 20% from around 146 yen to the dollar this week to reach the level of 180 yen to the dollar that his clients are worried about. Looking back to last summer, the yen’s exchange rate hovered below 160 yen to the dollar for about two weeks, but the sharp depreciation of the yen at that time failed to stimulate the purchasing enthusiasm of foreign investors and enterprises.
Technical analysis:
Gold: The price has been continuously hitting new session lows and has now dropped to around 3160. Under such circumstances, more confirmatory signals are needed to catch long positions, such as recovering the 3180/85 level, or taking long positions after the offshore market opens and liquidity is swept up again. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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The Nasdaq 100 index has further tested the level above 21,300, driven by the positive factors of the 90-day suspension of tariffs between China and the US and the abandonment of the previous chip control rules by Trump. However, as the short-term positive factors have been largely realized, we do not recommend continuing to go long. It is advisable to wait for an adjustment before choosing the entry point. If the index breaks below the level near 21,250 in the future, one can start to pay attention to the bearish signals. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: The price has been falling continuously overnight, but attention should be paid to the demand zone around 61. A long position should be attempted here. Additionally, if the price sweeps through the liquidity below 61, long positions should be attempted again after the rebound. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Today’s key economic data and events to focus on:
14:00 UK Q1 GDP Preliminary Estimate
French consumer price index for April 14:45
17:00 Eurozone Q1 GDP Revised Value
20:30 U.S. Producer Price Index for April
20:30 US April Retail Sales
20:30 US Seasonally Adjusted Initial Jobless Claims for Last Week
At 20:40, Federal Reserve Chair Powell delivered the opening remarks at an event.
21:15 US Industrial Output for April
