European and American trade agreement locked, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on August 21

Global Market Review

1. European and American market trends

The three major U.S. stock index futures fell, Dow futures fell 0.39%, S&P 500 futures fell 0.29%, and Nasdaq futures fell 0.23%. The German DAX index fell 0.36%, the UK FTSE 100 index fell 0.25%, the French CAC40 index fell 0.74%, and the European Stoke 50 index fell 0.33%.

2. Market news interpretation

European-US trade agreement locks in: automobile tariffs are expected to be reduced retroactively

⑴ Europe and the United States have announced detailed joint statements on the trade framework agreement reached at the end of July. ⑵ The EU's trade chief said that the EU will work hard to ensure that U.S. tariffs on EU car exports can be retroactively lowered. ⑶ The joint statement stated that the United States will impose a 15% tariff on most EU imported goods. ⑷ At the same time, the EU promises to cancel tariffs on all industrial products in the United States and provide preferential market access to US seafood and agricultural products. ⑸ The statement pointed out that once the EU introduces legislation on its promised tariff reduction measures, the United States will start to reduce current tariffs on automobiles and parts as high as 27.5%. ⑹The European xmmarkets.cnmission is striving to propose relevant legislation by the end of this month, which means that the US tariff reductions on European cars are expected to take effect from August 1. ⑺A senior U.S. official, who spoke on condition of anonymity, said European automakers are expected to receive tariff relief "in a few weeks." ⑻In addition, the agreement also covers multiple areas, including the United States' xmmarkets.cnmitment to only apply to the most-favored-nation tariffs on some xmmarkets.cnmodities such as EU aircraft and generic drugs, but does not include wine and spirits. ⑼In terms of strategic procurement, EuropeThe Alliance reiterated that it will purchase US$750 billion worth of U.S. liquefied natural gas, oil and nuclear energy products by 2028 and purchase US$40 billion of U.S. artificial intelligence chips. ⑽In addition, EU xmmarkets.cnpanies have also promised to invest an additional $600 billion in the US strategic sector by 2028. ⑾The two sides will also strengthen cooperation in digital trade, investment review, export control and supply chain security to jointly respond to the so-called "non-market" policies.

The Asian diesel market is weak, with refineries selling discounts in September

⑴ The Asian diesel spot market transactions are light, although some refineries are still conducting cargo sales in September. ⑵ Most refineries sold 10ppm sulfur diesel cargo on September 2019 at a discount, which is in line with market expectations of adequate supply in the region. ⑶ The spread of diesel-east-to-earth foods has expanded again to a discount of more than US$35 per metric tonne, so previous concerns about production disruptions have faded and the Asian swap market has calmed down. ⑷ Refining margin fell, closing at about $16.8 per barrel. At the same time, as low-priced quotes are everywhere, the spot spread of 10ppm sulfur diesel fell to 58 cents per barrel, erasing the gains of the previous trading day. ⑸ Singapore's medium distillate stockpile continues to increase, as diesel and gasoline imports surge, and imports are expected to increase further in the next two weeks. ⑹ At the same time, U.S. crude oil inventories fell sharply, mainly due to a decrease in imports and a surge in exports. ⑺For the refinery, Czech fuel xmmarkets.cnpany Orlen Unipetrol has to request a loan of 50,000 cubic meters of diesel from the national reserves to meet demand due to the suspension of production of the country's largest refinery. ⑻Russian diplomatic officials said that despite the United States’ warning, Russia will continue to supply oil to India.

Brad, the potential candidate for Federal Reserve Chairman, calls for a 100 basis point rate cut plan to meet with the U.S. Treasury Secretary after Labor Day

Former St. Louis Fed Chairman and next Federal Reserve Chairman's favorite candidate Brad called for a 100 basis point rate cut this year and further cuts in 2026. "Interest rates are a little high at the moment, and I think it can be cut by about 100 basis points by 2026 - I think this will start with the rate cut in September, and there may be further action this year," Brad said in an interview on Thursday. He has kept in touch with Treasury Secretary Becent on his campaign for Fed Chairman and plans to "probably" arrange an interview after Labor Day, September 1. As for whether to cut interest rates further next year, Brad said it will depend on data performance. He also emphasized the need to maintain the status of the US dollar reserve currency.

Federal Schmid: Inflation risks are higher than employment risks Current policy is in a suitable position

Kansas City Fed Chairman Schmid said he believes inflation risks are slightly higher than job market risks, but the current monetary policy is in a suitable position as policymakers consider whether to adjust interest rates next month. "When you gradually approach the optimal dual mission goal, it is actually more difficult to decide marginally where policy interest rates should go," Schmid said on Thursday. He said that the debate on when to cut interest rates is not the same.The key lies in whether individual decision makers believe that policies are too tight. "I think the policy is a bit tighter, but I think we are on the right path," he said. Consumer and corporate price data released last week showed inflation has accelerated in recent months, while also providing new evidence that xmmarkets.cnpanies can pass on some of the increase in import costs to consumers. Meanwhile, the job market slowed in the summer, with an average of only 35,000 new jobs per month in the past three months.

Türkiye imposes xmmarkets.cnprehensive restrictions on Israel-related ships

On the 21st local time, Türkiye has imposed xmmarkets.cnprehensive restrictions on sea transportation related to Israel. According to the latest policy, ships flying the Israeli flag or owned by Israeli xmmarkets.cnpanies are not allowed to enter Turkish ports, and ships flying the Türkiye flag are also prohibited from traveling to Israel. Sources pointed out that the restriction also covers all Israel-related cargo, including container transfers, and no operations can be carried out at Turkish ports. The Turkish government requires the shipowner to sign a statement confirming that its ship has no business relationship with Israel and does not carry cargo or military supplies to Israel.

The US-European trade agreement boosted, and euro bulls gained the upper hand

⑴ On Thursday, the euro fell to 1.1625 against the US dollar in overnight trading, and then the buys emerged and rebounded quickly. ⑵ The euro zone's August Purchasing Managers Index (PMI) data was better than expected, providing support for euro bulls. ⑶ The narrowing of the two-year Treasury bond spread of the U.S. and Germany also provided an upward support for the euro, pushing the euro to reach 1.1661 against the dollar in the early European session. ⑷ Although it fell back to 1.1649 in the early trading of New York, the subsequent details of the US-EU trade agreement triggered a buying influx. ⑸ The euro rose 1.1655 against the US dollar and rose 0.06% in the early trading of New York. ⑹ From a technical perspective, the monthly relative strength index (RSI) is rising, and the exchange rate is above the 21st and 55th day moving averages, both of which tend to be bullish. ⑺Later today, the number of initial jobless claims in the United States during the week, the Philadelphia Fed manufacturing index, and global PMI data may all trigger market volatility.

The new pattern of trade in Europe and the United States: breaking tariff barriers and deepening strategic cooperation

⑴ The United States and the European Union have reached an agreement on a "reciprocal, fair and balanced" trade agreement framework aimed at ending the uncertainty that has plagued consumers and the industry for months. ⑵ In terms of tariffs, the EU will cancel tariffs on all US industrial products and provide preferential market access to a variety of US seafood and agricultural products. ⑶ In return, the United States will set a benchmark tariff of 15% on almost all EU goods, which will become the highest tax rate unless the existing tax rate is higher than this standard. ⑷ Tariffs for automobiles and parts will be reduced from the current 27.5% to 15%, provided that the EU legislation cancels its tariffs on US industrial products. ⑸ In addition, the United States promises that the tariff rate on EU products such as drugs, semiconductors and wood will not exceed 15%. ⑹In terms of strategic procurement, the EU promises to purchase US$750 billion worth of US dollars by 2028liquefied natural gas, oil and nuclear energy products, and plans to purchase at least $40 billion in American artificial intelligence chips. ⑺European xmmarkets.cnpanies also promise to invest $600 billion in the US strategic sector by 2028, and EU member states will also purchase US military equipment. ⑻The two sides will also cooperate in areas such as investment review, export control, and eliminating digital trade barriers, and promise not to impose tariffs on "electronic transmission". ⑼Although the agreement framework does not cover all details, its core lies in reshaping trade relations between the United States and Europe by reducing tariffs and strengthening strategic cooperation.

Powell faces a balanced challenge: the game between interest rate cut bets and hawkish rhetoric

⑴ As the Jackson Hall meeting approaches, the market is paying attention to how Federal Reserve Chairman Powell balances the expectation of interest rate cuts and maintains central bank independence. ⑵DBS senior foreign exchange strategist pointed out that minutes of the Federal Reserve meeting in July showed that most officials believe that the inflation risk brought by Trump's tariff remarks is greater than employment weakness. ⑶ However, after the minutes of the meeting were released, employment data in July was significantly revised downward, and the unemployment rate rebounded to 4.2%. ⑷ The market has now digested expectations of a rate cut in September, so Powell may acknowledge the weakening of employment data and reiterate that the Fed will focus on labor market conditions and open the door to a possible rate cut in September. ⑸ This "labor market trade-off" position can not only maintain its inflation information, but also cater to market expectations, which may lead to a lower US dollar. ⑹ At the same time, Trump's remarks calling on Fed Director Cook to resign, also made the Fed's independence focus again, which added more uncertainty to Powell's speech.

The US PMI is expected to slow down in August, and data may intensify expectations of interest rate cuts

⑴ The US Standard & Poor's Global Corporation (S&PGlobal) will announce the initial value of August PMI on Thursday, and the market generally expects business activity to slow down xmmarkets.cnpared to July. ⑵ It is expected that the manufacturing PMI in August will drop slightly from 49.8 in July to 49.5, the service PMI will drop from 55.7 to 54.2, and the xmmarkets.cnprehensive PMI is expected to be 53. ⑶ Although the data is expected to weaken, considering that the shrinking manufacturing industry is a market consensus, the impact of this data on the US dollar may be limited. ⑷ However, if the data performance is much lower than expected, it may intensify market concerns about the outlook for the US economy and increase the probability of a larger rate cut before the end of the year. ⑸ Market participants will focus on sub-data related to employment and inflation to find more clues to the Federal Reserve's September monetary policy meeting. ⑹At present, the market still generally expects the Federal Reserve to cut interest rates by 25 basis points in September.

The United States and Europe have reached a trade framework agreement, and a number of tariffs will be lowered

⑴ The White House announced that the United States and Europe have reached an agreement on a "reciprocal, fair and balanced" trade agreement framework. ⑵ Key terms of the framework agreement include that the EU will cancel tariffs on all U.S. industrial products. ⑶In addition, the EU will provide preferential treatment for specific seafood and agricultural products in the United States. ⑷ In return, the United States promises to apply the most-favored-nation treatment or a 15% tariff rate to the EU goods of origin, toThe higher of the two shall prevail. ⑸ The United States also plans to ensure that the tariff rate imposed on goods such as medicines, semiconductors and wood from the EU's origin does not exceed 15%. ⑹ Although the details of the agreement have not been fully released, this framework shows that the two sides are taking an important step towards lowering trade barriers.

3. Trends of major currency pairs in the New York Stock Exchange before the market

Euro/USD: As of 20:23 Beijing time, the euro/USD fell and is now at 1.1642, a drop of 0.07%. Before the New York Stock Exchange, the price of (EURUSD) fluctuated at the last intraday level, and the short-term trading of a smaller bearish bias line, and the negative pressure on its trading below the EMA50 continued, which hindered its recovery in the previous period, and negative signals appeared on (RSI).

GBP/USD: As of 20:23 Beijing time, GBP/USD rose, now at 1.3461, an increase of 0.03%. Before the New York Stock Exchange, the (GBPUSD) price fell in the last intraday trading, with a slight bearish tendency in the short term. As its trading is below EMA50, negative pressure continues to exist, exacerbating the negative pressure around the currency pair, represented by negative signals on (RSI), which opened the way for recording more losses in the near future after the previous trading successfully escaped from oversold conditions.

Spot gold: As of 20:23 Beijing time, spot gold fell and is now at 3339.39, a drop of 0.26%. Before the New York Stock Exchange, the (gold) price fell in the last session, and was subject to dynamic resistance represented by trading below EMA5O. Small bearish waves dominate in the short term. The trend is in line with the support bias line of the trend. In addition to negative signals (RSI), a negative divergence is formed after reaching the overbought level, which intensifies negative pressure.

Spot silver: As of 20:23 Beijing time, spot silver fell, now at 37.814, a drop of 0.16%. Before the New York Stock Exchange, the (silver) price fell in the last session, and its trading price was slightly bearish in the short term, and the negative pressure on its trading below the EMA50 continued, which hindered the recovery in the previous period, especially as (RSI) began to form a negative divergence after reaching overbought levels, as negative signals emerged.

Crude oil market: As of 20:23 Beijing time, U.S. oil rose, now at 62.990, an increase of 0.46%. NewBefore the market, the price of (crude oil) continued to rise in the last session, using its trading price to be higher than the dynamic support represented by the EMA50, and despite reaching overbought levels, there was a positive signal on (RSI), in addition to it also breaking through the small bearish bias line at the intraday level.

4. Institutional view

ANZ: Oil prices have received a short-term boost due to reduced U.S. crude oil inventories

ANZ research analysts said in a report that oil prices have rebounded as signs of strong U.S. demand has improved market sentiment. U.S. crude oil inventories fell by 6 million barrels to 420.7 million barrels, according to weekly data from the U.S. Energy Information Administration (EIA). Although the data slightly improves the short-term outlook for oil prices, overall market sentiment remains pessimistic. Any peace agreement in the conflict between Russia and Ukraine could lead to a reduction in restrictions on Russian oil, and OPEC+ accelerated the lifting of the 2.2 million barrels per day voluntary production cut agreement, which further supported bearish sentiment.

The above content is all about "【XM Group】: European and American Trade Agreement Locked, Analysis of Short-term Trends of Spot Gold, Silver, Crude Oil and Foreign Exchange on August 21". It was carefully xmmarkets.cnpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!

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