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Collinson FX: July 24 - Trump starts Dollar War

by Collinson FX 23 Jul 2018 14:27 PDT 24 July 2018
Oceanbridge NZL Sailing Regatta, Day 3, February 5, 2018, Murrays Bay SC © Richard Gladwell

Collinson FX: July 24 - Trump starts Dollar War

Boring as it my be, Trump continues to dominate world economic headlines, as currency wars embellish trade wars. G20 Finance Ministers met and had a great rhetorical show of botching, as per usual. The amazing thing is that bureaucratic ruling elite have no idea that they should reflect the will of the people?!

Trump is already winning the trade war and has now launched the currency war. The FOMC reflects normalised monetary policy, as growth rises, so does demand for capital and thus interest rates!. According to the Bank of China, ECB, RBA, RBNZ etc, loose monetary policy counters fiscal expedience? The fundamental western problem is fiscal ineptitude followed by monetary servitude.

The attack, launched by Trump, enables the ‘Big Dollar’ some latitude. Trump will verbal the Dollar and monetary policy, from the FOMC, which enabled Europe and China. Their currency manipulation is a product of economic weakness but will not be subsidised by trading partners.

The EUR trad 1.1700, while the GBP regained 1.3130, mired in ‘Brexit Squabbles’. Turmoil in Britain remains, while the UK battles trade and political challenges. Commodity currencies rebounded, with the AUD pushing 0.7400, while the NZD looked to regain 0.6800. This is a reserve phenomena.

Currency and trade wars will dominate headlines, economically, while Geo-Politics remain a ‘ black swan’ threat.

Collinson FX: July 23 - Trade War dominates week

Global Currency wars erupted to close out a week dominated by trade wars. Trump broke protocol and directly criticised the Federal Reserves’ monetary policy, meanwhile exposing China and the EU, for currency manipulation. In a wide-ranging interview, Trump criticised the Feds policy of raising interest rates, adding to the cost of capital, while bolstering the Big Dollar. Trump has asserted that the Chinese have been surreptitiously devaluing their currency to boost their already substantial trade advantage, as does the ECB, leading to a new front to the economic war. There is no such thing as boring in the world according to Trump!

The overall impact was a retracement of the Dollar. The EUR surged back to 1.1720, while the GBP jumped to 1.3150, endorsing the power of the ‘bully pulpit’. Trade concerns that were so significant 24 hours before were forgotten. Trade exposed, commodity currencies reacted accordingly, with the AUD regaining 0.7400, while the NZD pushed back to 06800.

Whatever wind blows this week, will certainly come for the Genesis, Trump. Trade wars, currency wars, peace agreements?! Never boring!

Collinson FX: July 20 - Currencies hit hard

200718: Trade again dominated global financial markets overnight. Trump is talking about a trade deal with NAFTA partners, Canada and Mexico, while key economic advisers talk of progress. EC President Junker is due in Washington next week, and Economic Adviser to the President (Larry Kudlow) is talking of an imminent deal. Kudlow also spoke of progress on the Chinese Trade war. This all lead to some strong support for the Big Dollar. The EUR slipped below 1.1600, while the GBP collapsed to under 1.3000, hit by weaker than expected Retail Sales.

Commodity currencies were hit hard, with the AUD falling to 0.7330, while the NZD tries to hold 0.6700. There are extreme vulnerabilities for these trade exposed currencies, despite reasonably strong employment numbers out of Australia. Trade wars dominate the markets again while economic data has individual impact.

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