Various market performance charts

Markets Still Trying To Digest Dollar Policy of Trump Administration; ECB Meeting

John M. Bland, MBA, co-founder,

Trump Statements Opposing Strong Dollar Still Being Absorbed A week ago U.S. President Trump took the unprecedented step in recent history of talking down the USD and opposing further policy tightening by the Federal Reserve. The last President to jawbone the Fed not to raise interest rates was Richard Nixon in the early 1970’s. Since then its been taboo for a President to encroach on the independence of the Fed by commenting on monetary policy. As for his comments on forex, after too many misstatements by untrained government officials, it has become the bipartisan policy of U.S. governments since the late 1970’s for only the Treasury Secretary to comment on forex. This is due because of the sensitivity of the markets to any misstatement about the nuances of currency policy. The standard line since then has been “a strong and stable dollar is in the best interest of the United States”.

Trump’s tweets on Fed policy and the dollar violated these two taboos. Thus traders are on edge at all times lest the President once again launch yet another SCUD missile into the markets. Keep in mind that his twin goals are to support employment by a strong economy and a soft dollar into the November mid-term elections.

Little Newsworthy From ECB Thursday ECB President Draghi had little new to say at the latest ECB press conference on Thursday, July 26. He repeated that Euroarea interest rates should remain at current levels at least through the summer of 2019. He repeated the existing ECB guidance on reinvestments and indicated that economic growth is solid and broadly-based. As for inflation, the ECB expects that underlying inflation will pick up towards the end of 2018 and gradually increase over the medium term. As for forex, Draghi indicated that the ECB considers the exchange rate in its policy decisions, and pointed out that EUR has appreciated over the past twelve to eighteen months. His comment on the stronger EURUSD in the last year and a half presumably was sent for the benefit of the U.S. administration.

GVI Trading. Potential Price Risk Scale

AA: Major, A: High, B: Medium

Tue 31 July 2018

AA JP- Bank of Japan

A 06:00 DE- Retail Sales

A 09:00 EZ- flash HICP/GDP

AA 12:30 US- Core PCE Deflator

A 14:00 US- CB Consumer Confidence

Wed 1 Aug 2018

A Final Mfg PMIs

AA 12:15 US- ADP Private Payrolls

A 15:00 US- EIA Crude

AA 18:00 US- Federal Reserve Decision

Thu 2 Aug 2018

AA 11:00 GB- Bank of England Decision

A 13:30 US- Weekly Jobless

Fri 3 Aug 2018

A Final Services PMIs

AA 12:30 US- Employment

A 12:30 US/CA- Trade

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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