We’ve had baby Trump in a diaper hovering tens of feet above parliament square but I’ve got a new idea for all you Trump sceptics out there for your next false idol before the President. A Miley Cyrus ‘smash hit’ – Wrecking Ball – inspired figure featuring Trump on a wrecking ball. Following the spirited imagination of those responsible for two extant homages to Trump, I’m sure the model would render Trump as scantily clad as the star of the music video was! Regardless, Trump has caused a stir in markets ahead of the G20 Summit, smashing into any leader that finds themselves in the path of @realDonaldTrump!
Trump’s victims thus far: Shinzo Abe, Prime minister of Japan; Xi Jinping, General Secretary of the Communist Party of China; Jay Powell, his own Federal Reserve Chairman; Margrethe Vestager, EU antitrust commissioner; Moon Jae-in, South Korea’s serving President. That’s a lot of powerful people who all share at least one thing in common this week, they’ve all been and are still in the sights of Trump’s wrecking ball.
Yesterday the US Dollar was spurred by reports of optimism on the trade war. The mechanism was the same as the one laid out by us earlier this week with progress on trade being seen as supportive to the US economy, thereby muting the preeminent fear that the Fed will have to cut rates at its July meeting and further into 2019. Given his attack on each of these individuals above, perhaps we might be inclined to assume that Trump is not in the most conciliatory of moods and, therefore, perhaps Osaka won’t be the frenzied deal making bonanza it has the potential to be.
Then again, we’ve been surprised by Trump’s ad lib foreign policy before and then, perhaps, this weekend will be no different. President Xi will find himself in the crosshairs of Trump’s offensive amidst reports this morning that China has purchased oil from Iran. Sanctions on Iranian oil and exports by Trump have been in existence for a long time but the concession for Chinese exporters to access the nation’s natural resources was revoked last month.
The defiance of these rules, if confirmed and blamed upon political figures, will stand in the way of trade progress between the US and China, weakening the US Dollar as the expectation of lower interest rates is priced in all over again. The Dollar is weaker at market open this morning selling off around 20 pips versus the Euro and slightly more against a strengthening Pound. Movement within the South African Reserve Bank’s governorship is leaving the Rand unimpaired this morning. News that the Deputy Governor will step down leaves the Rand largely unchanged. The currency performed admirably alongside yesterday’s trade optimism and is now testing important technical levels within its major crosses.
Discussion and Analysis by Charles Porter