12.10 - who is stronger: Asia vs USA
- by Anna K.
Is Asian pressure on the United States effective for pushing back on the greenback? Talking about the issue.
Yesterday’s selloff gave us a lot of shock and a lot of scares. Although a selloff was long overdue, that doesn’t mean that we were to enjoy radical changes in the market. But with the last trading say of the week coming, the situation stabilized and is now allowing us to see the situation clearer.
A lot of losses was pared by Asian and European segments of the market. Just for a moment in both sectors the situation was touch-and-go as there are quite a lot of local problems in each of the regions. Asia is swamped with issues caused by American sanctions and tariffs. China is quite obvious.
India in its turn can also come under fire as the Iranian sanctions approach from the United States. The deal is that India was going to keep on buying oil from Iran which didn’t really make Trump happy. All of the countries that rejected to obey newly-imposed sanctions were under the threat of sanctions themselves. And India can barely hold it together as it is. new package of sanctions is not something that would be bearable by the economy of the Asian country.
Thailand, looking at all of the former partners of the United States also chooses to turn away from the States in favor of its closest neighbors. The country is now pretty occupied with new Eastern economic alliance. Together with China country is building new railways and is putting a lot of effort into renewing local infrastructure. All for making future local trading as simple as possible.
Japan is also looking for new partners besides the United States and we can see that in the fact that the country is renewing its partnership with Australia in order to have more leverage against North Korea and signs new agreements with Ukraine.
All of the situation points out to United States being outed of the region on its role as trade, economic and strategic partner. Various countries are preparing new agreements in order to be strong together against the pressure coming from the United States. But the picture as a whole is not nearly as pretty as we would like it to be as from American point of view all of the pressure coming from Asia is nothing more than a joke.
Strongest army, biggest companies and conglomerates, the strongest economy in the world – all of these describe the United Sates. Can we really be sure that all of the actions taken by the countries are doing any damage? No. as a matter of fact, even though greenback always declined against the basket of six major currencies when the new sanctions and/or tariffs are announced, United States still remain the country that feels no effect form the trade war.
Even though we have been talking about the possible damages to American economy as a result of sanctions we see none so far. Yesterday’s decline was all due to a global selloff and has nothing to do with international pressure.
As it might hurt other nations to admit it – Americans were able to build the system that is able to withstand the pressure from situation like that. At least it stands for now, so ISD trading is as reliable as always.
Watch British pound. Signals coming out of Europe on Brexit are way too mixed for GBP trading to be stable in the next several days. Although Brexit deal is getting closer in sight, it seems that the deal will hardly be in favor of United Kingdom’s economic interests.
What was Brexit about? We want to say independence, but it would be odd as Britain was never really a true part of European Union – own borders, own currency. The country was merely enjoying privileges for British companies and citizen in the border of European Union. And now it seems that Great Britain is risking to become a hostage of its desire to keep the privileges with no EU membership.
It was fairly obvious that EU proposal of a trade deal would finally win over British one. And not everyone back in the Kingdom is thrilled about it. As a result of the negotiations, pound is about to become a hostage to euro. Although no concrete decision is made yet, May might come across a lot of pushback on that.
Right now British Prime Minister is on the crossroad – take the deal and forever tie pound and British economy and trading future to European or agree to no-deal Brexit that would inevitably lead to declines in pound’s strength and towards a possible crash of the currency. In any case both of the scenarios are equally bad for Britain and for May who seems to be set for Brexit and against another referendum, which could technically deprive her of all of the trouble.
In any case major difference faced by the two sides of the talks are not only in trading world, but also in geopolitical picture of the region. There is also a matter of Irish border. And we will not see a deal or no-deal until that issue is resolved. So, until than GBR trading might be a hazard, but for those, seeking risk trading it is perfect asset at the moment.