Thursday April 13, 2017 - 20:42:41 GMT
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Key Surprises For Traders By President Trump
John M. Bland, MBA
Dollar Comments A Surprise President Trump surprised forex markets late on Wednesday when an interview with the Wall Street Journal was released. The President indicated that the USD was becoming too strong. We assume he was talking about the EURUSD pair because the dollar has been rising against the JPY ever since he became President. Furthermore, the dollar has been slipping against the Chinese Yuan due to heavy sales of U.S. securities by the Chinese Central Bank (PBOC) to support their currency. He did indicate that China would not be deemed a currency manipulator in the upcoming Treasury Report on Currency Manipulation. Some feel that Trump agreed not to name China as a currency manipulator in return for Chinese help in reining in North Korea, although I repeat that China has been doing the exact opposite for numerous months now. The point is that the President realizes that a weaker currency can provide a stimulus to economic growth and that is one of his economic objectives.
President As Forex Spokesman? Many of us who have been active in the forex markets for several decades have been surprised to hear Mr. Trump comment on forex rates. Going back all the way to the Reagan years, it has been an established policy for the U.S. government to have only one spokesman on comments about the dollar. This has been the Treasury Secretary after comments years ago by inexpert government officials, including a couple of Presidents, upset the markets. When making comments to the financial markets you really have to know what you are doing. Maybe its just reflexive but I am only going to be trusting comments from Secretary Mnuchin in the near future because I am confident he is very careful about what he says.
Chair Yellen Reappointment? President Trump also surprised the markets by supporting the concept of low interest rates. This should not surprise anyone who knows about his background real estate. Government officials have tended to shy away from comments on interest rates because some see it as a challenge to the independence of the Fed. One addition bombshell from the President was the mention that he is considering reappointing Fed Chair Yellen when she comes up for renomination in early 2018. It appears the administration has realized that Yellen's cautious pro-growth policies could not be more supportive of his economic agenda.
Weekly Event Risk Calendar:
Mon 17 Apr
00:00 Easter Monday Bank Holidays
Tue 18 Apr
12:30 US- Housing Starts & Permits
Wed 19 Apr
14:30 US- EIA Crude
Thu 20 Apr
12:30 US- Weekly Jobless
Fri 21 Apr
All Day- flash PMIs
08:30 GB- Retail Sales
12:30 CA- CPI
12:30 CA- Retail Sales
14:00 US- Existing Homes Sales
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland co-founding partner www.global-view.com
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