18.09 - USD-including trading analysis
With dollar dropping as much as 0.4 percent against the basket of six major currencies we have to ask ourselves - when will it all be back to normal?
Today seems to be favorable for every currency except for dollar that slipped under the announcement of new Chinese tariffs. Euro displays the biggest leap in several weeks and is keeping itself at a pretty high point right now. But there are also other good signs that E8uropean society seems to display right now which lead us to believe that euro is long away from the crush and is going to lead Europe into a good economic future.
New bank notes of 100 and 200 euros were presented to the public yesterday in Germany and we have only one thing to say – that is a very good sign. Let us put is this way – would you splurge on buying an apartment in a country you are not going to come back to? We wouldn’t. And so the European parliament wouldn’t spend money in the bank notes they were not going to use in the future.
Seems that Brexit doesn’t have that negative of an effect on European parliament as we would think. With Union losing one of the most powerful member it would be logical ig Union was in a state of a shock for the next couple of years together with the strongest economies of the region. Especially given that such countries like Italy, Greece and Spain are only undermining the wellness of the region.
But no. stability seems to be the thing of the economy in Europe right now. Germany and France are presenting new projects and programs. New bank notes are being issued, no one even reacted to the news on Italian budget. All of these signs are pointing to the fact that euro is becoming one of the world’s most stable currencies as opposed to dollar which has lost all of the stability on the last year.
Although it is not like there is a deadline for the finish of the battle of two currencies, the sooner the situation is going to stabilize the better for us. And euro has all of the chances in order to push dollar from the pedestal. For example, Iran and Iraq have already rejected dollar and are now going to pay for trading with each other in euro or pounds.
So the ground for the strong euro is already there. European Union has already set all of the necessary things in motion for their currency to grow in the nearest future.
Tariffs. We are so tired of the word. But it doesn’t look like we are going to stop talking about them in the nearest future as Donald Trump confirmed his intensions to impose about $20 billion worth of tariffs on Chinese goods and wares.
And the backlash didn’t make us all wait. Markets are mostly down this trading day. Regrettably, hit came upon emerging economies as well but the main news of the day is the fact that dollar is down 0.3 percent against the basket of six major currencies. That is just something we were talking about. That is just something the everyone was talking about. And sadly that is only just the beginning of dollar’s problems.
Yesterday we talked about the Chinese and their intentions to stop any kind of negotiations with the Americans in case new tariff package arrives. And here we are. There is no way that Chinese are going to keep on trying to negotiate with Americans on the recall of the package. It is likely that we are going to see an answer coming from Asia pretty soon. And all of that adds up to the fact that dollar is going to get hurt along with American economy as a whole.
But Americans are not going to be the only ones who are going to receive all the damage. Emerging economies will see a lot of damage because of China. And giving how those are already damaged by Turkish situation we Imagine those are not going to be awfully stable as well. So, what are we to do?
Well, we are to turn out heads to euro, as we imagine. After all that is exactly what European currency needs right now – more support in its ordeal to climb up to the top of the world’s financial ladder.
But there is still a question that is left unanswered although we have been trying to get it for months now – that is going to become of USD trading? Will it ever be stable and attractive ever again? Well, there are several steps that the greenback can make in order to back itself up in the eyes of traders all over the world.
one of them would take the longest and would require no additional actions from the government of the United States and traders alike. That is simply to endure two years that Trump still has in the office and elect another president. The one who will not have view as harsh as Trump does. But this would require a lot of patience from the traders as the temptation to selloff all the dollars and turn to other assets is too big right now.
Another way is to impeach Trump right now and see what is going to happen after that. This way is more chaotic, but it is also more swift and calls for more rapid changes in current situation.
There is also international pressure that is always going to be there until there is suspension in international relations between Unites States and all of other countries attacked by Trump. It is funny, but all of the problems lead to Trump at this point. And the only thing that can fix the situation is Trump stepping away from the Oval Office.
USD-including trading is very popular and it is extremely hard to turn over to another asset and another currency couples that will not include dollar. But that is not entirely impossible, we should say. All it takes is a little bit of time and big chunk of new information. With that one can totally step away from the greenback trading for the time of rapid shakes.
- by Anna K.