The only threat to the dollar is a big fat recovery in China
|Outlook:
We like to think conditions in the US economy are dollar-determinative. Slowing growth due to the trade war and shutdown, okay, but some genuine signs of robustness, to be verified by payrolls tomorrow. We can justify a pro-dollar attitude on the fundamentals. Besides, there's no competition. China and Europe are on the ropes. Japan is marginally okay but the UK is a wreck. The only threat to the dollar is a big fat recovery in China or a proactive stance in Europe. These seems somewhat dim prospects at the moment, but just wait—everything is relative.
What are the chances the ECB's new TLTRO initiative will work to goose bank lending and growth? Not all that great. Instead of pushing out the date for the first hike from end of summer to year-end, the ECB should have said it was pushed out indefinitely and perhaps replaced by a cut. Well, it's kind of hard to cut when the primary refi rate is already zero, so that would mean some other form of stimulus, like a renewed and bigger QE. Draghi has his work cut out this morning.
We could easily get a Trump push-back against the too-strong dollar as early as today. It probably won't work, but don't get too cocky about the trend.
Political Tidbits: Former Trump campaign CEO Manafort is sentenced today—he faces up to 24 years in prison, a life sentence. The Trumpies note his crimes are not related to Russian collusion but rather to various frauds, something that is emerging in Trump's own case. Nobody doubts this sleaze cheated banks and insurance companies as well as contractors and Trump University students. Tigers and stripes. But as the Dems wisely note, it takes popular outrage to push impeachment. Nixon resigned because his own party jumped ship. The current crop of spineless Plubs are not doing that. We may get neither an indictment nor impeachment. But we will get charges, perhaps in a sealed indictment, on financial crimes, including violation of Campaign Finance Law. One pundit said Trump must run for reelection to fend off those charges for another four years.
This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes.
To get a free trial, please write to ber@rts-forex.com and you will be added to the mailing list..
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.