I wrote yesterday about the recent deterioration in the U.S. / China trade dispute, which is continuing to dominate markets, producing losses in stock markets and “risky” currencies such as the Australian and New Zealand Dollars, while “safe haven” assets such as the Japanese Yen and precious metals have been bought.
In this environment where the market is heavily impacted by a political decision, markets can turn quickly, and every possible clue is scrupulously examined by the markets. President Trump is in his element in such an environment and has sent out several tweets on the subject, which has caused market movement.
A couple of hours after New York opened yesterday, the President launched a series of tweets which began by suggesting that the American consumer could avoid paying the new Chinese tariffs and ended with a dig at China, saying that they were truly desperate for a deal and would end up having their tariffs backfire on them. This was obviously an attempt at damage limitation against the impact of new Chinese tariffs on the American voter. Today’s tweets from the President were a little different, although they opened with similar content, but they included the phrase “when the time is right, we will make a deal with China.” These new tweets do not appear to have had any effect in the Forex market, but the U.S. stock market has been recovering in recent hours.
President Trump is quite skilled at manipulating market sentiment by use of social media, but this time, he is going to find the China trade dispute a very hard sell.
The only other significant news in the Forex market today was the release of poorer than expected British Average Earnings Index data, which showed average earnings rising at an annualized rate of of 3.2%, a little less than the 3.4% increase which the market consensus had been expecting. The British Pound has been falling for eight market days and looks like it is going to fall again over the course of today too.