Trump Provides Easter Miracle

It would have been nice to be able to report this morning that President Trump had shown humility in admitting he was wrong on a couple of his major campaign pledges.

That is probably on Easter miracle too far!

To backtrack so conclusively on one of his pledges that most would have supported is mind-boggling! To say that next week’s Treasury Currency Report won’t label China a currency manipulator is nothing short of astounding!

Still at least we can see that Trump values Chinese support over North Korea as more important than a label. But to sacrifice his whole trade policy is a little extreme even for a man used to extremes.

The second Easter Miracle concerns monetary policy. It wasn’t enough to break with tradition to discuss the dollar’s strength, he then went on to say that he would like interest rates lower for longer. Stepping on the toes on the Fed and the Treasury is also not “the done thing”!

Since he didn’t go public with his apology to Janet Yellen, let’s hope he sent her a nice big chocolate egg for Easter!

The dollar rose a little following its carefully stage-managed fall on Wednesday. The pound fell by 0.2%, still gaining 1% on the week. We are still within a relatively narrow range but the base that the pound is forming following the past nine months is encouraging.

The Euro mired in growth issues and political concerns cannot make any headway on an approach to major resistance at 1.0820. While it will take a Le Pen victory in the French election to see a test of parity, the single currency still displays a susceptibility to headwinds; economic and political.

The French election is fast approaching with the last week of campaigning upon us. The emergence of left wing radical Jean-Luc Mechenon has added a little spice to a campaign that, for

France, has been decidedly staid. Only one financial scandal is bad enough but it is perhaps even more bizarre that we have only had one sex scandal. Even that was dealt with in a highly statesmanlike way. Perhaps Macron is the man! He leads in the polls. A runoff against Marine le Pen should be, according to polls, a foregone conclusion but we have seen a few foregone conclusions over the past year or so. They didn’t work out so well.

In a shortened week, there are one or two significant data releases but political and geopolitical events are sure to dominate.

Russia and the U.S. are still at loggerheads over Syria. The Fate of Bashar Assad is firmly in the hands of Vladimir Putin.

There have been no reports yet of the outcome of Secretary of State Tillerson’s visit to Moscow. He is so cosy with Putin that perhaps he decided to stay on and have a few days R&R with the Russian leader!

North Korea continues to “tug the tiger’s tail”, criticizing the U.S for bringing nuclear weapons to the Korean peninsula. Any

further escalation there will see the JPY make further gains and the AUD fall.

Trump’s intervention this week calling for a lower dollar had the desired but a short-lived effect. It cannot have escaped his notice, how much further along the recovery trail America is than the economies of its major trading partners. Furthermore, The U.S. doesn’t face so many headwinds right now.

In the U.K., we have Brexit and the growth versus inflation issue. In the Eurozone, its politics and the different rates of activity that “one size fits all” brings. Japan is mired in deflationary concerns and emerging markets are suffering growing pains.

All that remains is to wish all my readers who celebrate such events, a happy and peaceful Easter. Try to remember the religious significance as you open your third chocolate egg!