Trump tweets, Amlo wins big and Merkel struggles

Clare MacCarthy

Senior Editor, Saxo Bank

"It's quite a whirlwind of things happening on the trade war front," says John J Hardy, Saxo's Head of Forex Strategy, after a weekend that saw president Trump castigate the EU as "possibly as bad as China, just smaller". This has exacerbated the already strained US/EU trade relationship and Europe will now, like China, seek to impose its own retaliatory tariffs.

In forex markets, the dominant theme is a sharply weaker Chinese yuan. "This deserves all the focus, against the USD we're getting to levels where the temperature is really turning up higher. Pay attention to this, of course at some point the Trump administration is going to respond," says Hardy.

Elsewhere, the Mexican election resulted in a strong parliamentary majority for the leftist popularly know as Amlo, and he might win control of the senate too, putting the left in a very powerful position in the US' southern neighbour. In Europe, German political chaos persists as Chancellor Merkel continues her efforts to save her coalition, which is on the point of collapse over immigration policy.

It's been a busy weekend in oil markets too, also triggered by a tweeting Trump who declared on Saturday that Saudi Arabia's King Salman had agreed to increase production of crude oil by up to two million barrels  a day in order to reduce market prices and make up the shortfall from Iran and Venezuela, says Ole Hansen, Saxo's Head of Commodity Strategy. Trump's message was subsequently diluted in an additional statement by the White House press secretary.

"We have to stick to the facts now, and those facts are that we have high oil prices at the moment because of supply disruptions, including some which have been caused by Trump himself, especially against Iran," Hansen notes. But though oil prices are elevated for now, this may not last very much longer, he adds: "Weaker economic growth may trigger a halt to the rally. China, Japan and South Korea all reported a slowdown in export orders in June amid an escalating trade dispute with the US," Hansen concludes.

You can access both of our platforms from a single Saxo account.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)