Trump Complains of Devalued Euro

Trump Complains of Devalued Euro

12 Jun 2019

Riskier assets are trading under pressure. Stocks in Asia were lower and European shares are down mid-day. US futures are pointing to a lower open on Wednesday. President Trump complained about the declining value of the euro on Tuesday.  He also said that the Fed is keeping interest rates too high.  Later in the day, White House advisor Kudlow did some damage control, stressing that Trump was not calling for a weaker dollar.  Trump does not want a stronger dollar to offset his beloved tariffs which has been the case in China. The dollar is mixed and gold prices are higher.

Trump Has Weaponized Tariffs

The Trump administration is considering tariffs on nations with undervalued currencies.  This appears to be another tactic, a provide a looking into the frustration Trump is feeling in terms of being able to have leverage to make a deal.  The comments about the euro support the view that this is a broad based concern by the US President.  With Short term rates in Europe near zero and 2.5% in the US, its hard to see the Euro rallying any time soon. That is why Trump is hell bent on getting US rates lower.

President Trump said that he is the only one that is holding up a US-China deal.  He said the two already had a deal in place but China reneged.  China officials have yet to respond to this or to his demands that Xi meet with him at G20 this month.

China and Japan Report Inflation Data

Chinese consumer prices moved higher to 2.7% from 2.5%.  The increase in consumer prices was driven by port prices due to the African swine flu.  Food prices jumped 7.2%. May producer prices were 0.6% above a year ago, down from 0.9% in April.  The average through April was 0.5%.  Separately, China reported lending figures that were in line with expectations.  Japan reported May producer prices and April core machine orders.  PPI rose 0.7% year over year which was in line with expectations, while machine orders rose 2.5% year over year compared to expectations they would fall by 5.3%.  The orders data was unusual and one of the only signs of expansion for Japan.

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