Riots in the USA, the demarche of China and Brexit

2 ביוני 2020

Fundamentally, the current fundamental background in the US stock market is ideal for sales. The economy shows the worst shape in history across the entire spectrum of the economy: from the labor market to GDP and retail sales. Tensions between the USA and China gives an additional gloomy negative not only in the economic, but also in the political sphere. The protests in the United States, which are accompanied by the states of emergency in a number of American towns, only increase the political negative. And the news about the bankruptcies of large chains of retailers, restaurants, gyms, etc. emphasize how bad things are in the economy.

We cannot remember such a combination of fundamental negative even in the midst of the global financial crisis of 2007-2009. But the US stock market against this background continues to grow. Especially its technology sector, which seriously intends to test new historical highs.

That is why, we continue to go against the market and recommend sales in the US stock market.

Moreover, the Chinese authorities recommended large state-owned agricultural companies to suspend purchases of US agricultural products, including soybeans. This is very painful fact for Trump, which he should not ignore. So, the escalation of the conflict between the US and China is still in the process.

The week for the British pound began with a positive note - reopening after the lockdown. But today, the EU and Britain will return to the negotiating table. Given how little progress has been made so far, there is every reason to believe that there will be no breakthrough this week either. This means that the pound will be under pressure. That is why this week we will continue to sell the pound primarily against the euro (buying EURGBP), and secondly against the US dollar (selling GBPUSD).

In general, the dollar is under pressure, so we will continue to look for opportunities for its sales in the foreign exchange market. First of all, against the euro and the Japanese yen.