Oops he did it again

Stephen Innes SPI Asset Management

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.

Author

Stephen Innes

SPI Asset Management

With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.

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