11.06 - motto of the week "Watch and think"
G-7 is behind us, Trump-Un meeting is awaiting to begin. Oncoming week is going to be an interesting one.
We have been waiting fot he G-7 meeting with great interest. It was very exciting to watch Donald Trump stepping into the negotiations together with all of the countries who have formerly been partners of the USA and now are all under the tariffs which Trump is very protective of. We were waiting for the markets’ reaction to the actions of the politicians but it seems that this time the actions were not as harsh as we have been prepared for. Or the markets just got tougher.. who knows?
For example, European segment of the market is only going up. Although Asian markets are feeling quite cautious with no sudden movements. Dollar also displayed no harsh reaction to the irrational behavior of American president during official meetings, having only added less than 0.05 percent against the basket of six major currencies. Main reason for such peace on the markets is that the situation is more focused on the political situation in the world, rather than on the economic aspect of all the actions.
The focus right now is shifted to the historic meeting of Trump and Un and that means that markets have lost some of the attention of traders who want to be the part of history being made by at least watching it happen. This way main topic for all the talks is hardly the position of dollar in the world arena right now. But all of this lack of attention may be very harmful to the greenback. As we know it is a very needy currency that wants all of the eyes on it but not all of the time – too much attention may hurt it as well.
So what conclusion can we draw from current situation? Only that there are a lot of underwater mines for dollar this week as traders will clearly not come back from the political scenery until Wednesday. That is two whole days. And in this time we advise to be extremely cautious around dollar. It may be very unpredictable.
The week starting today will be extremely filled with information and different occasions that are going to shape trading future for the nearest period in time. Starting today every day is going to mark various points for different countries. And as a result a lot of economies, indices and currencies are going to be hit.
Of course, the most interesting reactions will come from the Asian and American economies. Asian region is one of the most popular when it comes to trading indices. Plus it hosts a lot of international corporations, market cap of which can be easily affected u the turbulence in the home-country. Meeting of the American and North Korean leaders is going to take the cake when talking about the most influential occasions. Dollar and Asian economy will be watched closely even though that the main focus will be on Trump. His words, behavior and attitude will be the key points for the attention as the nuclear threat Is still unresolved for the world.
G-7 Summit is also among important events. Even though it is already over, the backlash after it may last for several weeks. The main impact will come from the steel and aluminum tariffs imposed by the USA. But those aren’t the only tariffs that will give the hits. As an answer, accepting sides have come up with answers of their own and imposed tariffs against American products. And some of the manufacturers have already felt the impact. For example the manufacturer of the Jack Daniels whiskey, which has been tariffed in Mexico, has already felt losses in the shares. And even though there is a slight recovery today, shares of Brown-Forman haven’t been this low in months.
Wednesday will mark the meeting of the Big-Three Central Banks. Thursday may invoke turbulence in Eurozone after European Central Bank is going to step into the debate over Italian situation. It seems that ECB is going to make it clear – that are not going to become hostages for the Italian policies even is that means Italy going away from Euro. But one more country turning away from the EU and unites European currency may be the beginning of the end for the EU. So, Thursday is to become the Euro-day for traders.
End of the week will display the fallout of tightly packed by events five days, prior to Friday. Football world cup that is opening in Russia on Thursday is a perfect was for Russia to show off to the whole world. But skepticism is still there. Ruble is still on the weak notes and Putin’s efforts to bring more investors may be fruitful even though all of the efforts to shut Russia off the world stage. But Russian aggression and unpredictability are not helping in this question.
So, as we can see there is a lot to talk about this week. A lot of things to analyze and think about. Boy is it going to be interesting.
- by Anna K.