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Trump says euro ‘dropping like crazy’ as he laments dollar

  
Analysis, Forex
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Trump with his usual rant against the dollar and the Fed

The latest tweet:
The Euro is dropping against the Dollar “like crazy,” giving them a big export and manufacturing advantage…and the Fed does NOTHING! Our Dollar is now the strongest in history. Sounds good, doesn’t it? Except to those (manufacturers) that make product for sale outside the U.S. We don’t have a Tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem. They don’t have a clue!
Here’s what ‘like crazy’ looks like:
Trump with his usual rant against the dollar and the Fed
The euro is down 0.75% against the US dollar in the past three months. The euro is higher today than it was on the day Trump was elected… ‘like crazy’ indeed.
EURUSD in Trump's term
Trump is continuing and says:
If the Fed would cut, we would have one of the biggest Stock Market increases in a long time. Badly run and weak companies are smartly blaming these small Tariffs instead of themselves for bad management…and who can really blame them for doing that? Excuses!
There are rumors that he was going to delay the tariffs that kick in on Sunday but this doesn’t sound like a guy who is about to backtrack.

Dollar holds firmer amid shift in risk mood earlier

  
  Analysis
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Markets are still largely more optimistic following Trump’s remarks on trade

EUR/USD H1 26-08

The dollar is holding firmer across the board following Trump’s more optimistic take on trade relations with China earlier in the European morning. Although the greenback has pared its advance against the aussie, it has notably gained against the euro, pound and yen.

EUR/USD is now trading near the lows for the day at around 1.1117 with the euro also finding little comfort from the latest German Ifo survey report moments ago.
Although the dollar is traditionally seen as a haven currency, one of the key factors affecting the currency now is Fed pricing.
Earlier in the day, Fed fund futures saw ~29% odds of the Fed cutting rates by 50 bps in September. After Trump’s remarks, those odds have been slashed to just ~15% now.
As such, that is helping to put a bid back in the dollar. Looking ahead, be wary of potential trade developments as it will continue to play a part in influencing Fed expectations ahead of the September FOMC meeting.

Donald Trump’s weekend comments on trade war escalation – regrets, retractions, and reversals

  
Analysis, Politics
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US President Trump had comments on Saturday morning on his regrets. Later reversed.

Let’s try to plot a timeline and get some sort of order, bolding mine:
1.
During a breakfast with British Prime Minister Boris Johnson on the sidelines of the Group of Seven meeting … a reporter asked Trump whether he had any “second thoughts” about his escalating trade war with China. 
Trump responded, “Yeah, sure. Why not. Might as well,” he said. “Might as well. I have second thoughts about everything.”
2.
Trump then claimed that talks were going well with China and that he planned to back away from some of his recent threats, such as seeking to force companies to leave China.
3.
The White House weighed in later, said Trump’s suggestion that he regretted escalating the trade war with China was “misinterpreted” and that what he regrets is not raising tariffs higher.
On the back down over ordering US companies out of China:
  • On Friday, Trump had said that “I hereby order” U.S. companies to prepare to stop doing business with China,
  • on Sunday Trump reversed this also, said he had no plans to invoke this law “I have no plans right now,” Trump said. “Actually, we’re getting along very well with China right now.”
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While Trump can be criticised on a policy level, he is very active on policy setting, on a personal level it does appear he deserves some sympathy with respect to his declining faculties. I hope he can find help and wish him well.
US President Trump had comments on Saturday morning on his regrets. Later reversed.

Trump announces fresh tariffs on Chinese products, ramping up rates by 5%

  
Analysis, Economy
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Trump makes the announcement via Twitter

On October 1, Chinia is going to be hit by fresh tariffs.
Here’s the announcement, which was clearly timed to hit moments after the FX close:
For many years China (and many other countries) has been taking advantage of the United States on Trade, Intellectual Property Theft, and much more. Our Country has been losing HUNDREDS OF BILLIONS OF DOLLARS a year to China, with no end in sight Sadly, past Administrations have allowed China to get so far ahead of Fair and Balanced Trade that it has become a great burden to the American Taxpayer. As President, I can no longer allow this to happen! In the spirit of achieving Fair Trade, we must Balance this very unfair Trading Relationship. China should not have put new Tariffs on 75 BILLION DOLLARS of United States product (politically motivated!). Starting on October 1st, the 250 BILLION DOLLARS of goods and products from China, currently being taxed at 25%, will be taxed at 30% Additionally, the remaining 300 BILLION DOLLARS of goods and products from China, that was being taxed from September 1st at 10%, will now be taxed at 15%. Thank you for your attention to this matter!
One thing that’s a bit unclear is the Dec 15 tariffs. I’m guessing those are still exempted until then.
All told, this isn’t that bad. It could have been worse. He’s ramping up tariffs by 5%. It’s not some kind of apocalyptic announcement but it certainly continues the trend of escalation.
trade war

Trump pressured Mnuchin to name China a currency manipulator

  
  Analysis
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Trump increasingly dictatorial

The Washington Post reports that Trump “exerted immense pressure” on Mnuchin to name China a currency manipulator.
One of the people with knowledge of Trump’s pressure on Mnuchin said the White House wanted China labeled as a currency manipulator so that it prod Chinese officials back to the negotiating table. This has proven unsuccessful so far. Instead, it has inflamed tensions between the two countries.
Read it here.

Trump says latest tariffs could be raised to above 25%

  
  Analysis
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Trump on tariffs

  • Trump says he can do more or he can do less on tariffs depending on how negotiations go
  • Could be raised “well above” 25% but “we’re not looking to do that”
  • He also said the new tariff is for a ‘short-term’ period
  • If China doesn’t want to trade with us anymore that’s fine with me
  • I think Xi wants to do a deal, but he’s not moving fast enough
  • China isn’t moving fast enough on fentanyl
  • The stock market will “take a little hit but it it will be phenomenal”
That’s not exactly a playbook that anyone can depend on.

Trump counters Kudlow: “I didn’t say I’m not going to do something” on dollar

  
  Analysis
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Trump comments late on Friday

Trump comments late on Friday
Trump made news late in the day on Friday. Speaking to reporters, he walked back comments from economic adviser Larry Kudlow, who earlier in the day said the White House wouldn’t intervene in the dollar.
“I didn’t say I’m not going to do something,” he told reporters.
It was earlier reported that Peter Navarro gave him options on devaluing the dollar but Trump ruled them out. They also weighed proposals to publicly talk down the currency.
His public reaction is typical Trump, he rarely likes to show his hand, even in a matter that’s decided. Bloomberg sources said on Fr
He followed up that comment with several other notable quips and tweets:
  • BBG, citing two sources, said lower rates from the Fed might do the job and help avoid intervention
  • “I could do [currency intervention] in two seconds if I wanted to” he said
  • “The dollar is very strong, the country’s very strong, the dollar — it’s a beautiful thing in one way, but it makes it harder to compete.”
  • “The fed acted too soon, and I turned out to be right. They acted too soon and too violently.”
  • “I think that China will probably say, let’s wait, it’s 14, 15 months until the election”
  • “So, I don’t know if they’re going to make a deal. Maybe they will, maybe they won’t, I don’t care, because we’re taking in tens of billions of dollars worth of tariffs.”
  • “When I win, like almost immediately, they’re all going to sign deals”
  • He was asked if he will tariff French wine, after Macron levied a tax on Internet giants. “I might, I might,” he said.”I’ve always liked American wines better than French wines, even though I don’t drink wine. I just like the way they look, OK? But American wines are great.”

Lots to digest there.

Trump on Iran says he is going to sit back and wait

  
Analysis, Politics
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Trump on Iran

  • Trump says he is going to sit back and wait, we’ll see what happens
  • He says it’s getting harder for him to make a deal with Iran, says it could go either way very easily
Obviously they’re not in a rush to war but that doesn’t mean they’re not putting some pieces in place. You don’t pre-announce any attack.
Separately:
  • Working on trade deals with Chinese President Xi

Chinese companies looking to buy U.S. farm products -Xinhua

  
Analysis, Politics
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Some Chinese companies are seeking new purchases of U.S. agricultural products, China’s official Xinhua News Agency said on Sunday, citing authorities, as Beijing and Washington look for ways to end a protracted trade war.

U.S. President Donald Trump and Chinese President Xi Jinping agreed at last month’s G-20 summit in Osaka to restart trade talks that stalled in May.

Trump said at the time he would not impose new tariffs and U.S. officials said China agreed to make agricultural purchases. But Trump said on July 11 that China was not living up to promises to buy U.S. farm goods.

Chinese businesses have made inquiries with U.S. exporters to buy crops and agricultural products and applied for the lifting of tariffs, Xinhua said, citing Chinese authorities. China’s Customs Tariff Commission will arrange for experts to appraise the Chinese companies’ tariff exclusion applications, Xinhua said.

“Relevant Chinese departments expressed hope that the United States would meet China halfway, and earnestly implement the United States’ relevant promises,” the news agency said, without elaborating.

The world’s two largest economies have been embroiled in a tariff battle since July 2018, as the United States presses China to address what it sees as decades of unfair and illegal trading practices. (more…)

US-China trade negotiations at ‘standstill’ as US weighs Huawei

  
  Analysis
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Headlines crossing

Progress has stalled as Trump’s administration tries to figure out how to meet the agreement to allow some US firms to sell products to Huawei.
This thing sounds like it’s going to fall apart before it even gets going. Stocks finished on the lows.
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