Trump meets Juncker at White House After Proposed 20% Tariffs on Autos .
FUNDAMENTAL FORECAST FOR THE US DOLLAR: BULLISH (LONG TERM)
- Dollar loses Powell-driven gains on Trump rhetoric
- Auto tariffs may be dropped as Trump meets Junker
- GDP gains, easing trade war fears might send USD higher
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G20 finance ministers and central bank governors will almost certainly give Treasury Secretary Mnuchin a hard time at a gathering in Buenos Aires this weekend. Trump meets Junker in order try to mend relations on Wednesday, while the WTO considers US/China tensions at a meeting Thursday.
This is a combination for volatility in the week ahead.
Assets like GOLD should be gaining in an environment where Trade Wars are a very real possibility. We now, still, are hearing news pundits and finance media sources referring to trade wars as trade “tiff’s” or “disagreements”. But it is clear to most now that Trump makes threats in order to get the target he is aiming his accusations at to the table to negotiate. Whatever and whenever a new risk to trade appears on our headlines and news feeds, we see some volatility in the global indices/markets. But we do not see GOLD being used as hedge but rather we see investors flocking to the haven of USD treasury bills/BONDS.
This risk aversion is causing the USD to strengthen with all the current global trade tensions, mainly caused by Trump, whether or not some of his concerns, issues and agendas may be misplaced or not. But he has just expressed his concern over a stronger Dollar as it gives US exports at a disadvantage. Could this cause a decline in USD? Whilst also accusing China and the EU of manipulating their currencies.
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