Boris and Kathy Forex Weekly – 13-03-2018 – Commodity Dollars
March 12, 2018 10:06 pm
The most important development over the past week had nothing to do with economic data or central bank policy. Instead, concerns about trade wars and military action in North Korea eased as the U.S. government softened its tone. President Trump’s bark proved worse than his bite as he signed the steel and aluminum tariffs, but offered exemptions to Canada and Mexico along with invitations to other nations to apply for exemptions. The actual policy was not as uncompromising as many had feared and for this reason, currencies and equities recovered with the NASDAQ rising to fresh record highs. The dollar surged against the Japanese Yen while risk flows returned to other currencies. The Australian dollar benefitted the most, rising 1% over the past week, followed by the New Zealand dollar, but it is the Canadian dollar that is likely to see the most traction in the coming week. The Swiss Franc and the Japanese Yen were the worst performers, which is consistent with the improvement in market sentiment. Looking ahead, with far less market moving events on the calendar, barring any significant downside surprises, the rallies in equities and high beta currencies could continue.
The most important development over the past week had nothing to do with economic data or central bank policy. Instead, concerns about trade wars and military action in North Korea eased as the U.S. government softened its tone. President Trump’s bark proved worse than his bite as he signed the steel and aluminum tariffs, but offered exemptions to Canada and Mexico along with invitations to other nations to apply for exemptions. The actual policy was not as uncompromising as many had feared and for this reason, currencies and equities recovered with the NASDAQ rising to fresh record highs. The dollar surged against the Japanese Yen while risk flows returned to other currencies. The Australian dollar benefitted the most, rising 1% over the past week, followed by the New Zealand dollar, but it is the Canadian dollar that is likely to see the most traction in the coming week. The Swiss Franc and the Japanese Yen were the worst performers, which is consistent with the improvement in market sentiment. Looking ahead, with far less market moving events on the calendar, barring any significant downside surprises, the rallies in equities and high beta currencies could continue.
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