News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • $EURUSD is currently facing down the midpoint of the 2014-2017 range and its historical range around 1.2125/50. How robust is this move? Is it more a Dollar slide or a Euro rally? I discuss that today: https://www.dailyfx.com/forex/video/daily_news_report/2020/12/03/EURUSD-Continued-Climb-to-Over-Two-Year-High-May-be-More-of-a-Euro-Move-than-Dollar.html?ref-author=Kicklighter&QPID=917719&CHID=9 https://t.co/kas6ea1ShA
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.13% 🇨🇭CHF: 0.08% 🇪🇺EUR: 0.02% 🇨🇦CAD: -0.07% 🇳🇿NZD: -0.10% 🇦🇺AUD: -0.11% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/P2eGs7wOLQ
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: France 40: -0.10% Wall Street: -0.14% US 500: -0.15% Germany 30: -0.23% FTSE 100: -0.37% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/UTmuwSgVa6
  • Mayor of Los Angeles says the city is near 'devastating' tipping point following announcement of city wide stay-at-home order $DXY $SPX
  • Mayor of Los Angeles orders a stay-at-home order amid rising Covid cases $DXY $SPX
  • The dispute between the Federal Reserve and the Treasury Department concerned economists and government officials last week. Traders, however, appeared unfazed as U.S. equity markets proceeded to higher ground. Get your market update from @FxWestwater here:https://t.co/DKK7WWHKlu https://t.co/K1f9Y1h4sn
  • China official urges preparation for Covid vaccine production - Xinhua via BBG
  • Over the past seven days, $EUR has been the best performing G10 major vs the #USD with a 1.66% spot return while $GBP has been the worst at -0.11% spot return $EURUSD $GBPUSD $DXY
  • The US Dollar (via the DXY Index) has hit fresh lows amid the latest headlines around US fiscal stimulus talks. Get your market update from @CVecchioFX here:https://t.co/yDXdpZIcxq https://t.co/GlSrdNjEeZ
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Gold: 0.22% Oil - US Crude: 0.14% Silver: -0.21% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/WR0TUUbAnB
President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

2018-03-03 05:05:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

  • US President Trump managed to escalate the tariff risk even further Friday when he stated 'trade wars are good and easy to win'
  • Themes to watch in the week ahead are trade wars, political risks (Italian elections) and monetary policy
  • Top event risk moving forward includes four rate decisions - ECB, BoJ, RBA, BoC - and US NFPs

What makes for a 'great' trader? Strategy is important but there are many ways we can analyze to good trades. The most important limitations and advances are found in our own psychology. Download the DailyFX Building Confidence in Trading and Traits of Successful Traders guides to learn how to set your course from the beginning.

Just When You Thought Tariff Rhetoric Couldn't Get More Intense

After US President Donald Trump signaled this past Thursday that he would announce details for the rumored tariffs on steel and aluminum in the week ahead, it seemed that the markets would be in a holding pattern until he elaborated. Yet, he managed to push the envelope even further on this incendiary risk appetite theme on Friday. Rather than backing down from questions and criticisms over the move, the President would dig in by saying that in some circumstances 'trade wars are good and easy to win'. History does not bear out that sentiment however. Looking back to the Bush-era steel tariffs in 2002, the economic impact was a net loss of jobs in industries hit by the higher resource costs and a net GDP decline for the United States - not to mention the damage in long-standing trade relations. Referring to an equally-weighted index of the US Dollar-based majors, the Greenback notably collapsed through the entire implementation of the program.

President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

Tracking Risk and the Dollar as Tariff Fever Increases

What was interesting about the closing hours of this past week was that despite the material escalation of the protectionism theme, US equities and some other risk assets actually checked higher. The Dow, S&P 500 and Nasdaq all recovered from their lows on the day - though the Dow's recovery still found it closing out a fourth day in the red to match the longest stretch of losses since March 27, 2017. The HYG junk bond and EEM emerging market ETFs would both muster a modest bounce of their own. Yet, when we look at global equity indices; we find the UK's FTSE 100, Germany's DAX 30 and the Japanese Nikkei 225 all suffered sharp Friday declines that led to critical technical breaks or positioned the benchmark for an easy last push. Should we take this as evidence that tariffs will have a greater impact on target countries rather than the implementer or there is skepticism over what Trump intends to actually enact or that the powerful draw of complacency is back in control. We will find out early next week.

President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

The Dollar and Euro Continue Their Dance

EUR/USD is the most liquid currency pair in the world, and its bearings can readily rope in all the entire FX market much less their respective range of crosses. For the Greenback, the engagement in a trade war clearly poses a risk as isolation will divert capital away from the currency and likely deliver a permanent downgrade in its use. Yet, that won't be the only theme pulling at the benchmark currency. Risk trends of course would give a complicated standing for the Dollar considering volatility is arises more readily. Monetary policy will also be a heavily charged theme, but the USD's motivation will be a little more indirect via the February NFPs and average wages figures. A vague but expressly threatening theme and a definitively timed event with distinct possible outcomes. For the world's second most liquid currency, we will have a similar dichotomy in fundamental sway. At the start of the week, we will process the Italian election with the Eurozone's political stability at stake. The ECB rate decision in the meantime represents the struggle for one of the most dovish central banks. The group is looking to normalize its policy but also recognizes that the Euro is extremely sensitive to the theme. In fact, the policy authority seems to be particularly concerned with the level of the currency and imminently aware of its lack of options.

President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

Three Other Rate Hikes and More

While the ECB rate decision will be this coming week's most loaded policy meeting, it isn't the only such event. There are in fact three other major central banks due to deliberate on their respective policies. The Bank of Japan (BoJ) is unlikely to alter its extremely easy bearing; but if they did, the impact would be severe given they are the most dovish of the major policy bodies. The Bank of Canada (BoC) has already put in for a few hikes over the past year, and speculation is still tracking their timing and intention for the next move. Finally, the Reserve Bank of Australia (RBA) is unlikely to do anything, but inaction draws its own issues for a currency typically prized for its carry. While all of the aforementioned is already enough to worry ourselves with, there is plenty more: Australia 4Q GDP; US net household wealth change; UK's Brexit bearings; and much more. Traders should be on guard over the coming week so we talk about the abundance of high profile event risk and its impact on the markets in this weekend Trading Video.

President Trump Raises Tariff Stakes, A Deluge of Key Events Next Week

To receive John’s analysis directly via email, please SIGN UP HERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES