Market update: Trump comments weaken the Dollar, wild trading in Aluminium, the ‘telecom wars’ start

17 Apr

by Mihály Tatár

 

Good Morning!

 

  • Traders took some of their ’world power showdown over Syria’ bets and portfolio protection trades off the table, but otherwise looked unsure on what to do next (SPX +0.81%, DAX -0.41%, Nikkei +0.13%, Shanghai -0.56%, US 10Y yield 2.83%, WTI back to 66.50 and Brent to 71.60 USD – but regarding the latter two, mind you that we are still before the fateful US decision on Iran and it is no coincidence that Brent long positions are at a record high). The Dollar broadly weakened after Trump accused Russia and China of  ’playing the currency devaluation game’, which was ’not acceptable’. Market participants – who were already wondering how much longer the ECB can maintain the 1.25 ’magic level’ in the EURUSD after last week’s rate hike comments – distilled that Trump wants a weaker USD and sold reflexively (EURUSD 1.2380, GBPUSD 1.4340, USDJPY 107, USDHUF 250.40, USDPLN 3.35, USDCZK 20.40, and the Russian Rubel quickly strengthened 3% to 61.31). (As a sidenote, as usual, analysts swarmed to explain that the US President is dead wrong and the Chinese Yuan, in fact, strengthened by roughly 25% since 2000. This is convincing, until you realise that most of the things you buy these days are produced in China, which became the second biggest economy on Earth in the meantime. That is, the Yuan should trade like a Deutsche Mark by now.) Clearly, nobody told Aluminium traders that the international crisis is over and the metal jumped another 5% to 2400 USD (+22% within two weeks), as buyers rushed to secure alternative supplies to Russia’s sanctioned United Rusal. (The company itself dropped 70%, not making the Russian elite happy, while rivals like Rio Tinto and Alumina rallied on average 10%. And they say you can only make money with cryptos these days.)

 

  • As forecasted here after the Trump election victory, the new normal in high tech business became the US getting serious about the technology race and security issues: Washington just hit Chinese telecommunications-gear maker ZTE Corp with a seven-year ban on purchases of crucial American technology (!). US telecom analysts are visibly very worried about China winning the race in 5G technologies (according to them, ’China already holds a narrow lead and the US won’t get a second chance to win’, pushing the Trump administration for further support. (What is Brussels doing these days, by the way? Losing one election after another on immigration must be exhausting.)

 

Have a nice day,

Mihály

 

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