Oops he did it again

Oops he did it again 

So much for typically quiet summer markets, then again traders have never had to deal with a wild card commander and chief like Donald Trump. Throw out the old correlations and welcome to Trumpsville where to expect the unexpected is the norm.

Wednesday’s  incredibly whippy price actions were due to another in an endless sequence of President Trump blunders that continues to undermine the Whitehouse administration credibility and punish the US dollar

The latest miscue is Trump’s remarks on the Charlottesville events which are having far  reaching counteractions

Things got ugly Wednesday after Trump’s Strategic and Policy Forum and Manufacturing Council of CEOs – both business advisory groups for the President – were dissolved. If you thought the president lacked the necessary key back room operators to implement the Whitehouse economic agenda, well things just got worse.

These headlines will have some far reaching implications that are likely to remain in the limelight for some time.

Predictably the dollar sagged, and safe havens were back in vogue, but the dollar fall-out intensified after the FOMC did little to stem the bloodletting. Cracks appear to be developing at the Federal Reserve Board over when to raise interest rates as the market reads the boards comments on inflation to be extremely dovish. Given the minutes were produced before last Friday’s CPI miss it would suggest the bar is even higher now for the Feds to hike rates in December.

Euro

Those mystery ECB sources were at it again overnight suggesting the that Draghi’s Jackson Hole appearance would not deliver a new policy message, implying he’s giving in to the more dovish ECB elements. While the EURO initially sagged, – the Trump advisory board egression saw the EURO rebound

Australian Dollar

AUD outperformance caught traders off guard, thanks to the unexpected rally in base metals. Zinc made fresh highs, splintering the critical 3,000 level for the first time since the 2008 financial crisis. Copper is also on a tear. The move was triggered by new restrictions on Chinese refiners as the fear of tightened supplies boosts demand. The weakening dollar added prices also.

Broader USD weakness has the Aussie sitting more comfortably this morning perched above the .79 level

Japanese Yen

External factors remain the primary driver. Over night have demand for JPY was in vogue on the back of the latest Tump Dump.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes