Markets ignoring political risks

21 March, 2017

Markets were unmoved by yesterday’s political risk events. Donald Trump's job approval rating took a hit, declining to 37% according to the Gallup poll. The U.S. President took another hit from FBI director, James Comey who said no information supported his tweets contending that Former President Barak Obama wiretapped his campaign before the election. Meanwhile, investigations on Russia’s interference in the presidential election is ongoing.

These recent developments were totally ignored in financial markets, but the two-month-old new administration is already under pressure due to lack of clarity on tax reforms and regulation cuts. U.S. Senate Majority Leader, Mitch McConnell, believes getting tax reforms done, along with repealing Obamacare, will take longer than the Trump administration claims. This shows how slowly things are moving and may be only a matter of time until markets lose their patience and push the sell button.

The U.S. dollar continued to move on the back of Fed comments. Chicago Fed President, Charles Evan echoed Fed’s decision last week that the Central Bank won’t accelerate the pace of monetary policy tightening, but he also kept the door open for three rate hikes if conditions warranted. Dollar bulls wanted a more hawkish statement to rebuild long positions, but it doesn’t seem we’ll be getting one this week, suggesting that some consolidation and range-bound trading will resume unless a surprise occurs.

In Europe, Theresa May will officially trigger Article 50 on March 29, but formal talks may not start until June according to European sources. Yesterday’s GBP price action suggests that triggering Article 50 seems completely priced in, and I won’t be surprised if GBPUSD shoots higher on March 29. However, with the countdown set to begin on negotiating the terms of the breakup, Sterling will likely be on a roller-coaster. Today’s U.K. CPI release will remind us why BoE’s Kristin Forbes’s voted for a rate hike in last week’s meeting. Inflation is expected to shoot above the BoE’s target of 2% but I don’t expect much of a reaction unless the number deviates a lot from expectations at 2.1%.

The fight between populism and globalism was live in yesterday’s French presidential debate. EURUSD declared that centrist and former investment banker, Emmanuel Macron, won this round, as the currency pair shot higher. However, I suggest not to jump into conclusions given that 40% of voters have not decided whom to back yet, and we already learned a lesson from the Brexit vote and U.S. Presidential Elections.

Source link  
USD and Oil in focus

The USD lifted again against all majors, as US retail sales m/m came in strong at 0.5%, in line with expectations. At the same time the previous month was...

Investors in cautious mode

Global equity and foreign exchange markets were relatively quiet on Wednesday as the U.S. financial markets were closed in observance of Independence Day...

Recession fears rise as trade war heats up

It has been an interesting first half for 2018. Economic fundamentals and politics took center stage as both fought for market influence.

Relentless rout for emerging currencies

While the speed of selling has slowed down compared to the early part of the week, emerging market currencies have continued to show...

Yuan weakness accelerates

Concerns over the possibility of an upcoming trade war are expected to remain front and center of investor focus once again today. Although the trading atmosphere is not quite as negative...

Lira jumps higher on Erdogan victory

All eyes are on the Turkish Lira this morning with the currency rallying sharply in early trade today, following the news that Turkish President Recep Tayyip Erdogan...

Trade war fears ease, but for how long

Global stocks have bounced back to life after China's central bank calmed markets by urging investors to stay calm and rational. While this move by...

Oil slips further ahead of OPEC meeting

Oil markets have suffered another blow today as US oil inventories showed an increase of 2.07M barrels (-2.1M exp), while at the same time US gasoline...

Trade war fears to dominate market

After imposing tariffs on steel and aluminum imports on its closest allies, the U.S. will be facing enormous criticism at the G7 summit on Friday in Quebec...

In the past 24 hours Bitcoin has gained 10.06% and reached $7345.89. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.2459% and is now at $1.171. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 14.4% and is now at $503.296. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
4FIBO GroupFIBO Group79%