Trump pushes dollar lower

Summary:

• Donald Trump talks the dollar down indicating he does not back up Fed rate hikes

• US President plans to meet North Korea’s Kim, and says he does not expect much from Chinese trade talks this week

• US dollar in a retreat, yields chug along, Chinese stocks higher

Donald Trump again let us know about himself on Monday offering a string of remarks ranging from trade talks to Federal Reserve’s monetary policy. As a result, the US dollar got a blow declining against almost all major as well as EM currencies. US President said yesterday that he was “not thrilled” with Powell’s raising interest rates. Notice that Donald Trump nominated Jerome Powell last year to replace former Fed Chair Janet Yellen. In addition, he accused both China and Europe of manipulating their respective currencies. Hs remarks do not seem to be particularly new as he already had offered similar opinions in July sending the greenback much lower then. This time might be similar, reading between the lines one may suppose that Trump’s comments were also meant to weaken the US currency (quite implicitly given that he suggested last week that the strong dollar reflects the strong economy). Indeed, the dollar index is losing virtually 0.5% as of 6:39 am BST with the heaviest declines against the shared currency and NZ dollar. The US 10Y yield is chugging along in the vicinity of 2.83% this morning.

Moving forward US President said on Monday that he would “most likely” meet with North Korean Kim Jong Un once again. He believes that North Korea has already taken specific steps toward denuclearization in spite of the fact there are some doubts about Kim’s willingness to abandon his arsenal. Let us remind that both leaders met in June in Singapore when Kim Jong Un basically agreed to work toward denuclearization of the Korean peninsula. Meanwhile, the major point in terms of an ongoing trade dispute between the US and China is a meeting between officials from both sides. However, Donald Trump already suggested that he does not expect too much from these talks in Washington saying that there is “no time frame” for ending the trade spat. As one may see Donald Trump does not share too optimistic view regarding this week’s talks, hence it is highly likely that the meeting could turn out a non-event solving absolutely nothing.

The US dollar index (USDIDX) is falling back this morning after drawing the shooting star candlestick at the weekly chart. As for now bears may target 95.00 as their nearest aim which needs to be broken in order to allow the price continue heading lower. Source: xStation5

Beside a torrent of Trump’s remarks we were also offered RBA’s minutes but they did not bring new insight when it comes to monetary policy. The minutes reiterated the view that there was no strong case for a near term interest rate hike. In terms of the currency RBA’s officials shared the view that the AUD had fallen a little against the US dollar, but looking at the trade-weighted index the Aussie had been treading within a band of last two years. The minutes underlined that uncertainty about the outlook for household consumption had diminished as expenditures had been supported by income growth in the second quarter. As far as the Australian economy is concerned, it is worth noting that PM Malcolm Turnbull secured its position winning the leadership vote 48 to 35 where he clashed with Peter Dutton thereby ruling out a snap election. The Australian dollar is gaining almost 0.3% as of 7:06 am BST.

Chinese stocks are getting a bid today rising over 1% following in Wall Street’s footsteps where gains were moderate registered on Monday. The Hang Seng (CHNComp) bounce off the support placed at around 10440 points and it could try to head toward its local highs localized somewhat below 11200 points. Source: xStation5