Ben Robson – The week of 3rd-7th June 2019

US President Donald Trump totally dominated last week’s news. He is becoming increasingly isolated, dictatorial and shocking, and his foreign policy tactics are pushing the World towards recession.

Not content with waging a trade war against China, Trump waded in against both Mexico (where he confused border security with trade) and India. Europe is also in in his sights. In his vernacular, certain trade arrangements are “not good.”

His actions will certainly put other countries on edge. And of course, there are the real consequences of tariffs on World trade. Whilst in simple terms bi-lateral trade disputes affect only the two parties concerned, the consequences are far wider reaching. Perhaps this is the point Mr. Trump doesn’t quite understand!

And so to this week and as Mr. Trump (and extended family) embark on a State visit to the UK, he is already stirring up opprobrium with his personal endorsements of Conservative party leadership candidate, Boris Johnson and Brexit party leader Nigel Farage. The Lord Mayor of London, Sadiq Khan has called Trump “one of the most egregious examples of a growing global threat.” There are many who would agree.

In a period, where markets are certainly “trading Trump” from a Global-macro perspective, there has to be some fairly extraordinary economic data to attract attention. To illustrate my point, the US domestic economy, in terms of GDP, employment and consumer confidence is robust and yet markets had a shocking month of May.

As we start the month of June, we have some important data announcements this week, notably ISM manufacturing and Non-manufacturing surveys and both ADP and Non- Farm Payroll figures. Fed Chair Jerome Powell will also be speaking in Chicago on Tuesday to perhaps give us a little colour on how the Fed is thinking.

To start the week off, The RBC Canadian manufacturing PMI will be released on Monday. Expect a number around 50. Canadian GDP surprised to the upside last week. The Canadian dollar has remained quite resilient to US pressure, but be wary of Mr. Trump lashing out against Canada.

If last week’s Twitter assault on Mexico is anything to go by, then Canada should be preparing for some kind of renewed rebuke. The US ISM manufacturing report, also on Monday, is expected to read 53.

Tuesday is a big day for Australia with the Reserve Bank’s interest rate announcement due. Anticipation is high for a 0.25% cut to 1.25%. Eurozone CPI is expected at 1.3% Y/Y for May later in the morning. US Fed Chair Powell’s speech on Fed Policy Strategy will definitely be scrutinized (and perhaps market moving) in the afternoon.

Wednesday sees Australian markets in focus again as Australian 1st quarter GDP is released and is expected at 1.8% Y/Y. US ADP employment is released in the afternoon with expectations of +183,000 new jobs created. ISM Non-Manufacturing is in line to read 55.5.

Thursday sees The ECB on centre-stage with Eurozone Interest rates unlikely to move from 0% and Friday we have employment numbers from both the US and Canada. Canadian employment figures (after a bumper number last month) are unlikely to excite (exp flat), but the unemployment rate is likely to remain at 5.7%. US payrolls- much like ADP numbers earlier in the week- are expected to be in the region of +180k with the unemployment rate remaining at 3.6%.

Global trade tensions and recession will continue to concern markets. Long Gold, long JPY and long EURGBP, have certainly been the benefactors of the last few weeks. If equity market panic ensues, then traditionally these three trades tend to merit attention.

 

Good luck and good trading! Ben Robson

Ben Robson is the CEO of Spectrex Commodities and author of Currency Kings- How Billionaire Traders Made Their Fortune Trading Forex And How You can Too.

 

 

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