The volatility is still on, While Trump is still re-inventing the bicycle!

Walid Salah Eldin

Active member
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The markets participants could put aside the geopolitical concerns about Syria, after selective hits from US, UK and France following last Friday US dovish closes.
The attacks were targeting the governmental infrastructures of chemical weapons industries not the Chemical weapons itself avoiding wide attacks against the governmental troops which could make remarkable victories since The Russian military intersection in Syria!
Mar US retail sales rose by the highest monthly scale since last November to provide more support to the investors to load riskier assets. US retail sales surged by 0.6% in March, while the consensus was referring to 0.4% increasing only, after shrinking by 0.1% in February.

The risk appetite could not be refueled during the Asian session as the data came out from China mixed to some extent showing yearly economic expansion by 6.8% in the first quarter like the last quarter of last year, while the median forecast was pointing to 6.7% expansion.
The Chinese retails sales in February have shown rising by 10.1% y/y and the forecast was rising by only 9.9%, after increasing by 9.7% in January, while the Chinese industrial production rose yearly by only 6% and the consensus was referring to 6.2% increasing, after soaring by 7.2% in January.
The investment in the fixed assets in China came also below the market expectations in February showing rising by only 7.5% year on year, while the median forecast was 7.6% rising, after increasing by 7.9% in January.

The Greenback came under pressure across the broad following Trump's accusation of currency devaluation against Russia which had its ruble undermined recently by the threats of facing more sanctions against it from US and China which has referred to the possibility of using of the Yuan devaluation as a weapon for fighting in the Trade War which has been sparked by Trump!

USDJPY came down below 107 level during the Asian session capping Nikkei 225 from following The US major equities indexes, before Japan Prime Minister Shinzo Abe's visit to US today.
Abe's visit is also important before expected meeting between Trump and Kim Jong Un next month or in early time of June.
Abe who is facing lower popularity in Japan as the most recent polls said is expected to discuss trade issues with Trump, after his direction to officials to explore rejoining of the TTP free-trade deal.
Trump pulled US out of this deal directly, after taking his office in the White House without negations and with no delay, even before appointing the resigned white house economic advisor Gary Cohn amid conflicts about the protectionism and the Trade War consequences to be replaced by Larry Kudlow who devised of "Buying the greenback selling gold"!!
The TTP pact's conclusion was mainly directed against the Chinese trade benefits and without US it loses its importance as Abe said previously following the US withdrawing from it.

Anyway, the Trade issue is still one of the main market concern next and it is still to keep containing the market sentiment from time to time pressing down on the equities markets and the global recovery, as long as Trump is still re-inventing the Bicycle!
But Trump has a lot to know during revising all US pacts, before taking such decisions he was believing they are right.
He is re-inventing the bicycle and he does not realize that but in the late time.
His first appointment word of making America first was like making America alone.
China has about $1.2tr of treasuries and threat of re-diversification can send the yield curve higher threatening the US creditability which is always in check.
He wants to reflate and has the cost from trade contenders or even partners too!
China is exporting to US on account by financing its debt in the same time by this way.

This is the cycle he wants to get out of but he has to pave for that and choose the suitable time. this is the political decision he does not want to understand.
He always call for negotiations, after taking the decision and this is not the way that can make US first.
When The Former Fed's Chief Governor Alan Greenspan when he was testifying about the trade gap with China, he was answering by sample word "that's in the benefit of the US prosperity" and he was the one to adopt the US strong policy to go along with several US administrations.
Now, Trump and his administrations are trying to understand that by the very bad way threatening the global recovery.

He refused to take his turn reflating the economy by only lowering taxes as a republican and let the turn to the Dems to increase the spending.
He is insisting in breaking that pattern but he does not know that the pattern is characterized to mend itself. At a certain point the dollar will go down monetarily and the US products will be much more attractive inside US and outside it.
The balance was to occur without looking for buffering outside US and The workspace would be created inside US to sustain its financial position.

Have a good day
Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din
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