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Collinson FX: July 17 - "Trade Foe" triggers blow-back

by Collinson FX 17 Jul 2018 03:26 PDT 3 July 2018
Australian 49er team talk Oceanbridge NZL Sailing Regatta, Day 3, February 5, 2018, Murrays Bay SC © Richard Gladwell

Collinson FX: July 17 - "Trade Foe" triggers blow-back

July 17: European markets were mixed, after trade data suggested a continued trimming of the EU trade surplus, while the USA/Russia Summit continues in Helsinki. Trump has labelled the EU a ‘trade foe’ which drew immediate criticism and blow back from European leaders. The expanding trade wars are a massive threat to the EU and being labelled a foe by the US, while US and Russian leaders meet, is a worry. Trump has also warned that a trade agreement between the US and the U.K. Is under threat if ‘Brexit’ is not executed. He has squarely backed the Brexiteers in the looming Tory leadership battle. The EUR traded 1.1710, while the GBP hit 1.3260, battered in a tumultuous political war.

The FOMC Chairman, Jerome Powell, will appear in front of Congress on Wednesday so speculation regarding his testimony will ignite currency markets. US Retail Sales failed to meet expectations but the bullish sentiment surrounding the ‘Big Dollar’ is likely to continue. Chinese GDP, Retail Sales and Industrial Production were all uniform, as usual, allowing some comfort to commodity currencies. The AUD consolidated above 0.7400, while the NZD traded 0.6775, both extremely vulnerable to any trade deteriorations.

Watch the Helsinki Summit and speculation regarding Powell’s testimony to drive currency markets.

Collinson FX: July 16 - Upping the ante

July 16:A huge week of global diplomacy, with Trump meeting with NATO leaders and then moving on to the UK, culminating in the Helsinki Summit with Russian President Putin. The world political and economic agenda has moved to a new level. Trump moves along at a lightning pace and this leave markets in a constant state of flux. Global equity markets ignored the rising global trade war, rallying on economic fundamentals, in a seemingly risk-off environment.

Trump took NATO to task, forcing new defence spending commitments on recalcitrant member states, exposing their hypocritical energy alliances. He has now moved on to the UK, visiting Scotland, where he has strong ties from his Mother and extensive investments. The U.K. Is suffering a political civil war, with the Brexiteers declaring open war on PM May, forcing a widely supported Brexit to the political front. Trump predicted Breixt and is a key supporter.

Trump will conclude his Global tour with the Russian summit in Helsinki. US Democrats are calling for the cancellation but Trump will persevere and succeed. He is the most significant leader of our generation and is changing the world paradigm. He will seek agreement with Putin on subjects they can agree upon and ensure progress. The Dollar has been on a bull run and the US economy and the Fed will ensure that continues. The EUR settled around 1.1650, while the GBP remains in a confused state, holding around 1.3250. Commodity currencies are extremely vulnerable to trade war escalations. The US has threatened a further $200 Billion worth of trade sanctions against China and the Chinese may look for a settlement before their economy is derailed. A treaty would be extremely positive for the NZD and AUD, with both suffering serious damage, due to their trade dependency. The NZD closed the week at 0.6760, with the next technical support level just under 0.6700, while the AUD tries to hold 0.7400.

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