Historic Moment for US | Trump Answered Draghi's Question | ECB’s Effect Continues

Posted by Naeem Aslam | 09/03/2018 03:40

Give Some Credit To Trump
A New Tier Level of Friendship To Avoid US Tariff
ECB’s Effect Continues


 

Give Some Credit To Trump
Today is the day that investor may have to continue to praise Trump because his strategies have brought North Korea to the table for peaceful discussions and this by no means is a small event. Kim Jong-un, from North Korea, has invited Donald Trump, from the US, to meet him.
 
Trump may see and play this event as a victory. However, in reality there may be no change in North Korea’s stance towards their nuclear program or abandoning their nuclear program. Nonetheless, his fiery statements have brought North Korea and the US to a historic moment which for traders, indicates less geopolitical uncertainty- at least for now.
 
Risk on trade is back in play as investors have reacted to North Korea and US peace talks and the gold price is under pressure- a pure risk of trade.
 
 
A New Tier Level of Friendship To Avoid US Tariff
Draghi raised a question yesterday by saying if Trump wants to put tariffs on his allies who are his friends? President Trump raised the bar today by suggesting a near tier of friendship which is called “real friends”. Both Mexico and Canada are exempt from the new tariffs which trump introduced. If new NAFTA agreement becomes a reality between US, Mexico and Canada, there is no need to introduce new tariffs. The reason is simple because in the new agreement Mr Trump has designed the deal which puts America first or what he calls a fair deal.
 
So, the idea behind this is that he wants to introduce similar agreement with other countries and exempt them from new tariffs. Regardless, market participants are paying close attention to this strategy and they want to see if Trump who is known in making the deals can develop something which may initially send a message of destruction but at the end, you have a deal which doesn’t look so bad if you compare it to the worst case scenario.
 
 
ECB’s Effect Continues
Currency traders are digesting the new development from the ECB under which the ECB dropped its pledge to continue to buy bonds if needed. The ECB has taken a remarkable step in their decision to close the liquidity tap this year because the bank sees no significant threat for economic crisis.  The Euro has been over sold since yesterday as Draghi balanced his hawkish statement with dovish stance.

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