27/ 08/ 2019

Trumps Plays his cards to Re-Negotiate on Trade with China

The U.S. dollar strengthened on Monday morning, recovering from overnight losses after the United States and China sought to ease trade war tensions. President Donald Trump, on the sidelines of the G7 summit of world leaders in France, said Chinese officials had contacted U.S. trade counterparts overnight and offered to return to the negotiating table. Vice Premier Liu He, who has been leading the talks with Washington, said China was willing to resolve the trade dispute through “calm” negotiations.

While both euro & sterling struggled to stay afloat on the dollar due to more positive points adding to the Dollar’s strength. Analysts believe Trump’s strategy to force the hand out of China on the trade war might just be the perfect trick to get China in play.

Germany’s GDP and U.S consumer confidence figures are the key stats of the day. Geopolitics will continue to be the key driver, however.

26/ 08/ 2019

Week Ahead | Trade War Escalation Angst to Hit the Majors

Last week started with anticipation of Fed Chair Jerome Powell’s Jackson Hole speech, but ended with shocked escalation of US-China trade war. Risk aversion should continue to dominate the markets this week, as hard-line rhetorics are expected from both sides. Indeed, they look moving away from a September trade meeting, rather than towards it. Sterling ended the week as the strongest on hope that UK Prime Minister Boris Johnson could find alternatives on Irish backstop that avert no-deal Brexit. Yen and Swiss Franc were among the strongest naturally in risk averse environment. Though, Euro also firmed up against most, with help from the rebound against Dollar. 

Euro’s path will be an interesting one to watch this week. Firstly, it’s clear that ECB is preparing for a package of monetary stimulus for September meeting. Secondly, recent data indicates no sign of recovery in Germany’s economy. It could also be argued that Eurozone economy, which is already weak, won’t be immune from any US-China trade war escalation. Thirdly, Euro is facing Italian political turmoil, as well as risk of no-deal Brexit. 

The week ahead is relatively light on data. The markets will need to monitor updates from the G7 summit, trade chatters, Italian political turmoil and any news regarding Brexit.

For today, the majors are set for another tumble as an escalation in the U.S – China trade war haunts the bulls. Stats out of Germany are unlikely to help.

22/ 08/ 2019

Market buoys while Fed Powell to Headline Annual Jackson Hole Policy Conference

Common currency euro was little changed against the dollar on Wednesday, as forex markets remained mostly calm ahead of a crucial meeting of central bankers later this week. With markets rushing to price a significant easing from central banks in the United States and Europe, the outlook for euro/dollar will depend largely on whether or not policymakers live up to those expectations. While the sterling pound declined against the dollar, as worries over a no-deal Brexit clouded investor appetite for the currency despite German Chancellor Angela Merkel suggesting on Tuesday that there might be room for negotiation. British Prime Minister Boris Johnson is due to meet Merkel on Wednesday ahead of a G7 meeting at the weekend and it expected to tell the chancellor that unless she agrees to change the Brexit Deal, Britain will leave the European Union on Oct.31 without a deal.

After minutes from the Federal Reserve’s last policy meeting, the International Monetary Fund hosed down some aggressive expectations the central bank would embark on a series of deep interest rate cuts.

All eyes will be on US Jackson Hole Symposium from today until tomorrow with Jerome Powell’s speech on Friday. This will be a major lookout for all markets since Central Bankers will be discussing on main topics such as Interest Rate Cuts, Policy outlooks & future strategies for sustainable economy.

21/ 08/ 2019

Markets remain quiet on anticipation of US FOMC Minutes Today

Directions in the forex markets are not very clear for now as consolidations continued. There were lots of reasons for a move but traders remained generally cautious. The US is stepping up its hardline rhetoric on China, and prompted some worries of RBA Governor.

Italy is in political turmoil as the Prime Minister resigned. UK looks set in tight deadlock with EU regarding Irish backstop as Brexit date approaches. Yet, there is no follow through movements after the news.

Sterling plunged below as investors waited for European Union leader’s response to a demand from Britain’s prime minister to remove the Irish backstop from the Brexit deal. On Monday, PM Boris Johnson wrote to European Council President Donald Tusk to propose replacing the Irish backstop with a commitment to put in place alternative arrangements by the end of a post-Brexit transition period. The pound rose after German Chancellor Angela Merkel said the European Union would think about practical solutions regarding the post-Brexit Irish border.

It’s another quiet day on the economic calendar, which will leave the markets exposed to geopolitical risk and sentiment towards FED monetary policy.