President Donald J Trump was in defiant mood yesterday as he addressed the 2017 US Coast Guard graduation ceremony, telling cadets (and the world media) that “No politician in history… has been treated worse or more unfairly”. The markets made their own mind up. The US stock markets had their worse day in many months as the US30 lost 1.76% the US500 lost 1.81% and the tech heavy Nasdaq (US100) lost 2.57%. The fall has continued overnight in Asia the Nikkei is down over 1.5% and the ASX in Australia lost over 1.2%. There was a slight recovery as the White House announced the at a former FBI director will head up the “Russia Inquiry”.
JPY and Gold have been the principle beneficiaries of the worries over the Trump administration and the unwinding of the so called “Trump Trade”. The mighty Greeenback has been under pressure all week with the EUR, GBP and JPY all performing strongly.
The key USDIndex, broke the 200 day moving average on Friday (May 12) and has not stopped to look up since. The psychological 100 level which seemed a key support to more USD strength and the heralded tax cuts and rolling back of regulation that we started the new year with is now ancient history. It closed yesterday (May 17) at 97.30 some 6.5% below the opening week of January and below the pre-Election level in November. The Trump rally appears to have unwound and further weakness in the USD and US Stocks could be anticipated until the political storm clouds surrounding the White House subside. Markets tend to over react both positively and negatively but as sentiment and events continue to be the key driving force the economic data will play second fiddle.
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Senior Market Analyst
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