Trump/Yen, Yen/Trump

The Central Bank of Japan apparently took seriously Trump's warning to its main trading partners - not to try to manipulate exchange rates.
According to well-known sources, the central bank of Japan is said to change its monetary policy. The explanation is - to make it more effective. Market participants, however, fear that its preparing for normalization is becoming a reality.
And this led to a fall of the Japanese Nikkei 225 by nearly 300 points and a serious appreciation of the yen. The dollar, which reached trading levels of 113 yen in the past week, traded at levels 111.18 on Tuesday evening.
Indeed, the dollar marked its largest decline against the main currencies for three weeks. The dollar index lost 0.8% of its value on Friday, with the loss of 1% against the yen, the US currency declining 0.7% against the euro.
The bond repurchase program was launched by the head of the Japanese bank in the distant 2013. The aim was to raise inflation.
Now, however, according to experts, the Japanese central bank has to make a lot of effort to persuade Trump's administration that it does not artificially lower the exchange rate of the yen against the dollar.
On the other hand, it appears that 2% inflation targeting the bank is an unattainable goal, even against the backdrop of serious monetary stimulus. Buying bonds, however, has led to an increase in government debt of over 40% over the past five years. At the same time, the goals of the Japanese central bank do not seem to be achieved. And this largely points to the ineffectiveness of the bank's policy.
Interest rates on 20-year Japanese government bonds also rose 6 basis points to 0.535 percent, moving away from their 18-month minimum at 0.475 percent earlier this month.
It has to be mentioned that the currency war is already a fact, as a continuation of the trade between the US and China. On Friday, President Donald Trump accused the major trading partners of the US of manipulating their exchange rates and thus receiving unfair competitive advantages.
We can recall that the trade war between the two leading economies started earlier this month, with the imposition of reciprocal duties on goods for $34 billion.

Strong growth in Europe and Asia after good results from Google

The US indexes ended yesterday's stock market upwards, prompting Asian and European markets to open on a plus today. The growth of European markets, however, was far stronger. The German DAX has risen to levels of trade of nearly 12,700 points, or an increase of over 1% compared to yesterday.
Opening on a positive territory is also shown by US index futures, with the S&P 500 trading at levels above 2,816 points.
To a large extent, the positive mood contributed to Google's results. The parent company, Alphabet, reported yesterday quarterly earnings of $32.66 billion, an increase of 26 percent and acceleration in the same quarter of last year. For comparison, revenue growth in the second quarter of 2017 was 21%.
After the results, the company's shares rose 5% and Alphabet's market capitalization was almost equal to Amazon's. For comparison, Amazon's market estimate is at $874 billion.
Still, Apple's shares remain closest to the boundary line. After good news about the company, its stock continued to rise and its capitalization is already close to 942 billion dollars. So Apple is only about 6% of reaching the coveted $1 trillion, which has not been achieved by any company in history.
So far, more than 17 percent of S&P 500 companies have announced their second-quarter results, with 82 percent of analysts expecting analysts to expect, according to FactSet. Wall Street has high expectations for this reporting season, with analysts forecasting an annual growth of 20%.

Oil is resuming its decline

After yesterday's recovery, the price of oil went down again today. Brent with delivery next month was traded at levels of $73.30 by noon. The risks of oversupply of raw materials have begun to dispel concerns about tensions between the United States and Iran.
Yesterday, the President of the United States addressed the Iranian president a serious threat to Twitter, which was repeated by other officials of the government. All of this, bent market participants, to the expectation of further oil supply problems. It rose to $74 a barrel, but failed to keep up on that level and began to fall again.
Saudi Arabia and large producers are increasing their yields to offset the losses likely to come as the deadline for imposing sanctions approaches.
Meanwhile, US pil reserves at the supply center in Cushing, Oklahoma, increased at the end of last week, retailers have reported, referring to information from the Genscape Market Research Agency.
In the last week of the month, however, inventories in the center are expected to drop, add traders. Further clarity on the state of supply is expected to be made tomorrow after the data on oil stocks in the world's largest economy.
The attention of market participants has moved away from escalating disputes over the impact of world trade on global economic growth and the demand for energy sources and raw materials.
Over the weekend, the G20 financial leaders voiced concern about the global economy's risk that may be the trade strain between the United States and China.

Bears rule: the market on Friday found no reason to rejoice

On the evening of Friday, the US dollar lost against the euro and let it grow. The main currency pair is above 1.1720. The risk for the euro is Italy with its political imbalance, besides some of the politicians again mention the possibility of the country's exit from the euro area - this is not the driver at which the single European currency can rise in price.
In oil, the "bulls" are trying to win back part of the weekly sales, but in the last couple of weeks, no one has gone up for black gold effectively. A barrel Brent opens the week with worth about $73.07, the resistance is at $73.50 and $73.75 respectively.
The gold closed last week near historically low levels, at a price of $1,233.60.

New ESMA regulations

ESMA (European Securities and Markets Authority) has negotiated measures related to the offering of CFDs and binary options to non-professional traders in the European Union (EU), and these include:

• Binary options - prohibiting the marketing, distribution or sale of binary options to non-professional clients;
• Contracts for Difference - Restricting the marketing, distribution or sale of CFDs to non-professional traders. 

The limitation includes: thresholds for the use of leverage when opening a position; a margin rule for closing positions; measures to protect against a negative balance on the account; preventing the use of commercial incentives by the CFD providers and a strict risk-specific warning through standardized formulation.
Arrangements for CFD and Forex Trading:

• The leverage thresholds for opening a position of non-professional traders are 30: 1 to 2: 1, this ratio varies according to the volatility of the underlying asset.
• Margin Rule for Closing Account Items. It determines the percentage margin (50% of the minimum required margin), whereby providers must cancel one or more open positions with CFDs to a non-professional client.

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Why was the dollar spared by the trade war? (2)

Last month, the ECB reaffirmed its non-aggressive policy, which helped renew the dollar's appreciation. The euro fell 0.7 percent against the dollar at the ECB meeting on June 14. Then the dollar rose the most against the euro in two years.
The outlook for the US economy is the best among developed economies, according to Marvin Loch, chief strategist at BNY Mellon. The Fed remains the most aggressive in its tone, compared to the other central banks around the world. Since the beginning of the year, the Reserve has raised the interest rate twice, and is expected to make two more hikes until the end of the year.
At the same time, the ECB is unlikely to raise interest rates by the end of the year, barely stopping the stimulus for that period.
In addition, credibility among bullish investors for the euro is diminishing as a result of the emerging trade war between the US and Europe. Experts point out that serious threats to foreign exchange markets may be an extraordinarily high short-term growth in the US economy, which would trigger a further strong appreciation of the US currency.
Investors continue to worry about the minimum slope in the interest rate curve, which continues to raise fears of an impending recession.

Why was the dollar spared by the trade war? (1)

The US dollar has so far been spared by the decline in other major currencies as a result of fears of a trade war between the US and China. Experts explain this, strange at first glance, with something very simple. Indeed, the trade war will not be good for the United States and the country's economy. Simply, it is expected to be much worse for US trading partners.
In this case of full force is the rule - "best among the bad ones". The rise in protectionism in the US, as a result of the US-China trade war, would generally hurt the US economy. So far, however, a mix of political events, fiscal stimulus, and concerns about bond market conditions can actually trigger a short-term rise in the US dollar.
Analysts from the ING investment bank explain the stability of the dollar with the "attachment" of the market participants to the US currency and the strong US economy compared to other developed economies. And as the currency pair with the best potential for growth of the US dollar, is the world's most traded one - EUR/USD, at least in the short term.

Oil fell after the US can resort to its reserves

US oil fell back below the psychological limit of $71 a barrel. This became reality after Saudi Arabia warned it would raise its output for two of its clients in Asia. In addition, the US has said it can turn to its strategic reserves to stop the rise in fuel and oil prices.
Oil futures in New York lost 0.8% of their value after falling by 3.8% last week.
With the price of oil reaching a three-year high in the past month, fears that the trade war between the US and China will hurt the price of "black gold" have become serious.
The renewed sanctions against Iran, as well as the declining production from Venezuela, were factors that compensated to a certain extent the depreciation of the oil price.
OPEC and its partners have agreed that they can resort to an increase of more than 1 million barrels of oil if needed.
US crude oil is trading early in the morning at $70.50 a barrel.
Brent with delivery in September traded at a level of 74.96 dollars per barrel.

The S&P 500 tested the key resistance level at 2,800 points

Big news for stock market investors. The US S&P 500, accounting for about half of the world stock market capitalization, overcame key psychological resistance.
According to technical analysts, if the index succeeds permanently to keep above that barrier, it may be heading for a test of its historic peak.
We can recall that since the index reached new record levels at nearly 3,000 points at the beginning of the year, followed by a sharp decline in February, it took over 10% of its value.
And now the question is - will we see a test at the top and will the indicator keep permanently above the 2,800 level?
If the S&P 500 fails to last above 2,800, its weakness can recover and we could witness its strong frustration. Quarterly reports by US companies for the second quarter will be published soon, also volatile August is expected, which has repeatedly proven that it can surprise investors very imprecisely.

Mark Mobius: The trade war is a prelude to the next financial crisis

The veteran investor, Mark Mobius, has one warning for investors who quickly forgot what happened in February with the indexes.
According to the expert, the trade war between the US and China is a precursor to the next financial crisis. Still, worst in US-China relations is ahead, in the light of the imposition of new tariffs on Chinese goods worth more than 200 billion dollars.
The worst is yet to come, commented Mobius in an interview with Bloomberg.
What does Mobius mean by "the worst"?
Mobius expects a further 10% decline in emerging markets and, ultimately, a financial crisis in the US and around the world.
According to him, tensions between the US and China will rise, with Trump not giving up on his plans to impose tariffs. Inflationary pressures will rise from wage growth in an environment of full employment in the world's largest economy, says the investment expert.
Good news, according to Mobius, is that damages to stock markets will eventually be a good opportunity to buy. He himself is currently raising his capital to take advantage of these potential opportunities in the future.

Oil lost nearly 7% yesterday, partially recovering today

Brent recovered partially from his strong losses yesterday. Today, the raw material added 1.3 dollars, or 1.8 percent, to $74.7 a barrel. US crude oil futures added just 42 cents, or 1.8 percent to $70.8.
The premium between Brent and US crude oil is still extremely small - just four dollars, against more than ten dollars just a few weeks ago.
Yesterday, "black gold" lost nearly 7 percent of its value as a result of continuing tensions in trade relations between the US and China. Yesterday, Trump threatened China with import duties on Chinese goods for about $200 billion.
Experts recall that we often see the compensation of some of the losses, with decreases with yesterday's magnitude. So the rise in raw materials today is not a big surprise.

The ECB is expected to raise rates sooner than forecasts

Eurozone bonds declined as market participants raised expectations that the ECB would raise interest rates earlier than expected.
German bonds led the cut, as the euro rose, after rising expectations that the ECB would raise rates well before December of next year.
Currently, at futures trading levels, the ECB is expected to raise interest rates by 82% by September of the following year. By comparison, until recently the expectations were only 70%.
Interest rates on five-year German bonds rose three basis points to a minus 0.26%, while those on 10-year bonds also added 3 basis points to 0.33%.

Turkish lira collapsed

Turkish President Recep Tayyip Erdogan initiated a turmoil for the Turkish lira again. This happened after two of his actions. First, Erdogan appointed his son-in-law as a new economy minister, and second, he would now determine who to be appointed as the head of the central bank of Turkey. At the same time, the governor's new term will be reduced to four years.
The Turkish lira lost 3.8 percent of its value against the US dollar, to a level of 4.74 pounds, and its loss since the beginning of the year is now more than 20 percent.
The document, which has the force of a law, also provides for the president to be the deputy governor, as well as the members of the Monetary Policy Committee, who will also have a four-year mandate, Reuters reports.

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Gold imports to India declined by 39%

India, the world's second-largest gold user, after China, reported a 39 percent drop in gold imports for the first five months of the year. The data are extremely disappointing and come at an extremely inappropriate time for gold.
The noble metal fails to find its way up, despite the trade war between the US and China, after the entry of reciprocal customs duties on goods worth over $30 billion.
The strong dollar also does not particularly support the price of gold to which the "yellow metal" is in a negative correlation. A traditionally strong dollar is associated with a weakness in the performance of gold.
Imports of India, which almost entirely fuel demand in the country, are considered a serious indicator of metal demand. This is something that gold traders are watching very closely.
The weak rupee since the beginning of the year, which makes gold relatively more expensive for Indian consumers, also largely determines the weak demand for the metal.

Asian indices fall given the tension between the US and China

Asian markets ended today's session on negative territory as a result of continuing tensions between the US and China. Chinese commodity duties are expected to enter July 6th on Friday, but the Chinese said they would advance with reciprocal duties, which, though again from July 6th, will become a reality 12 hours earlier due to the time difference.
Duties imposed are reciprocal, on US and Chinese goods worth $ 34 billion.
The Japanese benchmark Nikkei 225 lost 0.31% of its value to 21,717.04 points. Tokyo Electron shares fell by 4.28%.
In China, Shanghai Composite lost 1% of its value and closed at 2,759.13 points. In Hong Kong, HangSeng moved down 1.01% to 28,253.33 points.
On the stock exchange in Australia, the S & P / ASX 200 dropped 0.43 percent to 6,183.39 points. In South Korea, Kospi finished the session with a fall of 0.32% to 2 265.46 points.
Losses in Asia became reality after the fall in US indices yesterday. US markets ended the cut-off session on Tuesday on red because of downs in the technology sector. The Dow Jones industrial average index fell 0.54% to 24 174.82 points, with Apple shares falling by more than 1.5%. The broader S & P 500 ended with a fall of 0.49% to a level of 2,713.22 points.

Almost a record period of correction for US indices

US stocks are a few days away from a worrying event that will not delight all investors in these markets.
The Dow Jones and the S & P 500 are within a few days of reaching a key level. Be in the corrective phase during February 8th.
It was then that we witnessed the massive sell-offs that brought down the index by about 10% after new records were reached.
Rarely in history, after more serious adjustments of 10%, the indices move in such narrow ranges. Or the indices are in a narrow range of 10% already five months.
By Thursday, both indices - Dow and S & P are in an adjustment phase of 98 trading days. This is the longest such series since the financial crisis.
Then it was 108 days before the market came out of its correction phase.
In other words, if the two indexes remain in the adjustment phase for another 11 trading sessions by July 16, this will outperform this 2008 period and will be the longest similar period since 1984.
In 1984, the S & P 500's broad US index required 122 days to go through the adjustment phase, according to data from the WSJ Market Data Group.

D. Kostin: There will be a difficult second half of the year for the markets

US indices closed the first day of the new quarter slightly on positive territory. Investors, however, should not be granted much, because they may be in difficult months.
We can only recall that historically July and August are one of the most volatile months of the year. Remember what happened in August of 2016?
The number of financial experts who warn stock market investors to watch out for the second half of the year is rising. And one of them is David Kostin, the head of the Goldman Sachs Equity Investment Unit.
Kostin commented that, on the one hand, there is a serious geopolitical tension and, on the other hand, the Fed's rise in interest rates, from which they seem to be seriously worried about inflation.
In addition, Kostin predicts further interest rates on 10-year US government bonds rise, which should also cause problems for stock markets.
Of course, the situation is not entirely "black" according to Kostin. He believes companies with good balance, such as Facebook, will perform well in the second half of the year, even in an environment of further rising interest rates.

The trade war threatens the reserve status of the dollar

The danger of a trade war between the US and China is again on the agenda. And this may play a bad joke to the appreciation of the dollar against other major currencies, according to analysts.
Moreover, President Trump's protectionist policy threatens the status of the US dollar as the main reserve currency.
The US has already introduced steel and aluminum duty and threatens to do so with other Chinese and European goods. Meanwhile, the two parties concerned are expected to take reciprocal action.
The use of the dollar has long brought about serious risks for countries like China, as witnessed by turbulence caused in the country in 2009 by the financial crisis.
China Central Bank, again warned of avoiding the dollar in 2013.
Otherwise, history shows that in a trade war, the dollar has seen a serious depreciation against other major currencies.
In view of the current strong increase in green money over the rest of the major currencies, the time to shorten the dollar appears to be quite appropriate.

Eurozone with an inflation

Inflation in the eurozone has appeared. According to the latest data, inflation in euro countries, for the first time in more than a year, is above the ECB's target. At the same time, the main consumer price index is still growing at a slow pace.
Inflation in the euro area amounted to 2% yoy, against a background of 1.9% last month. Without taking into account volatile food and fuel prices, inflation in the euro area is 1%. This is a slowdown in last month growth, when the rise in the core CPI was 1.1%.
High oil prices are expected to continue to exert upward pressure on growth in euro area goods and services prices.
At the same time, the key consumer price index is expected to grow at an accelerated pace in the second half of the year.
Against the background of widespread wage increases in the euro area, investors and analysts do not expect any major surprises in the upward direction.
The euro initially rose against the dollar after data, adding 0.1% to its value to 1.1656 dollars. Subsequently, however, the single currency returned some of the earned, returning to levels below 1.1650.