Trump on Twitter, undervalued euro and important data

12 ביוני 2019

Traditionally, financial markets could not relax mainly because of one person. It is all about US President Donald Trump. Yesterday, he said that if the head of Sino, Xi Jinping, does not meet with him at the G-20 summit, the United States will impose additional tariffs on Chinese goods. So, as we warned, you should not relax and calm down. Accordingly, buying gold and Japanese yen, especially at current prices, seems to us one of the best trading ideas today.

Well, about Trump, we cannot but pay attention to the next wave of verbal interventions on his part. This time, he said that "The Euro and other currencies are devalued against the dollar, putting the U.S. at a big disadvantage." Not that everyone rushed to buy euros after that, but Trump definitely sowed seeds of doubt.

Immediately, a whole series of major analysts burst out with forecasts in favor of euro growth. In particular, Deutsche Bank noted that the euro is undervalued by 7 against the dollar and should cost 1.20. And according to the Organization for Economic Cooperation and Development model, the euro is generally undervalued by 22% (!).

Yesterday, unexpectedly, quite good data on the UK labor market appeared. Employment in April rose by 32K (with the forecast +4K), and the average salary showed growth above analysts' expectation 3.1% (with a forecast 3.0%). We have been waiting for much weaker statistics. Nevertheless, we consider the pound growth as an opportunity for its sales. Well, there are no reasons for the pound optimism. Brexit pauses until the new Prime Minister will be chosen this will happen no earlier than July. And it is not a fact that it will be a positive sign for the pound. So, you can re-open trade a little bit later in case of os stop-loss execution.

The main event of the day will be the inflation statistics publication from the United States. The output of data below forecasts or below 2% (the Feds target ), would be a pretty strong signal in favor of dollar sales. Recall, in a week the Fed’s decision on the parameters of monetary policy in the United States will be announced and it is very likely that the rate will be lowered this month. Perhaps even by 0.5%. Today's data will have an impact on it.

Our trading preferences for today are as follows: we will continue to look for points for the sales of the US dollar against the Japanese yen, as well as the euro, sales of oil and the Russian ruble, as well as buying of gold and sales of GBPUSD.