US stocks fell due to Trump's decision to withdraw from the Iranian contract

US stocks fell on Tuesday after President Trump announced his intention to abandon a nuclear deal with Iran. The S&P 500 fell 0.03% to 2,671.92. At the same time, seven of the 11 main sectors completed trading in the red zone. The Dow Jones index added 0.01% to 24360.21. The Nasdaq index rose by 0.02% to 7130.70. Strengthening of the dollar continued: the ICE dollar index, which rates the US dollar to a basket of six major currencies, rose by 0.3% to 90,055 and now it continues to grow. Futures on the stock indices indicate mixed opening today.
President Trump's statement that the US is withdrawing from a multilateral nuclear deal with Iran, concluded in 2015, has become the main driver of the market, as the reporting season for the first quarter ends. So far, 78% of S&P 500 component companies reported earnings that were higher than expected. But optimistic reports have not provided the expected increase in the stock market, as investors are concerned about the impact of tightening the monetary policy of the Fed and the possibility of a trade war between the US and China.

The EU responds to Trump

The President of the US, obviously, thinks he can do whatever he wants without consequences. It turns out, however, that this is not the case and the EU is about to respond in the most unprecedented way.
EU countries intend to target imports of goods worth 2.8 billion euros from the US, ranging from T-shirts and whiskeys to bikes, if Trump continues his plan to impose a 25% import duty on imported steel.
EU countries are planning to impose reciprocal duties on consumer goods imported from the US, including agricultural and steel products.
These tariffs have been discussed between the European Commission and the EU government on Monday in Brussels.
European regulators target imports from the US, including t-shirts, jeans, cosmetics and other consumer goods, bikes and boats, worth around 1 billion euros. Targets include orange juice, bourbon, corn and other agricultural products worth 951 million euros, including $854 million in steel and industrial products.
Trump's plans to levy import duties on foreign steel products, has already met serious opposition, even in his own party. Such actions, according to political observers, risk starting a trade war as well as triggering a number of complaints in the World Trade Organization against the United States.

The Yen - the greatest winner of future trade wars

Last week, President Trump shook the market with the imposition of imported duties for steel and other products. This immediately triggered talks about potential trade wars that have affected currency markets.
The potential US involvement in a trade war with other countries around the world has led to serious sales of US stock markets.
One currency, however, wins against all the tensions and has seen a serious appreciation over rivals. And that was the yen. According to investors and analysts, however, the appreciation of the yen is just beginning.
These events are largely reminiscent of what happened in the early 1990s when the US took protectionist measures against Japan.
The yen reached a record high of 79.75 yen per dollar in 1995, when similar protectionist actions were taken by the United States.
The proposed tariffs can reduce the US economy's growth by 0.2 percentage points next year, posing additional threats as to how US trading partners will react, analysts at Barclays Plc say.
In search of security, the traders turned to the yen, the Swiss franc and the euro. Trade-sensitive currencies, like the Canadian dollar, also declined.

Are tax reliefs not fully calculated in stock prices?

After months of delays and postpones, tax cuts are getting closer to reality. They, to a large extent, were at the base of the growth of US indices, leading them to new historical records.
But JPM, the US investment bank, has good news for the investors - the growth is not fully reflected in stock levels.
In a letter to investors on Monday, bank analysts said tax cuts were reflected in just 50 percent of stock levels. This gives space for the index to rise to 2,800 points by the first months of next year, according to analysts.

Trump: The tax reform will push the indexes up

President Trump said yesterday that his planned tax reform would make stock markets rise sharply.
The stock markets added $5.2 trillion of the November 8 election victory, or a 25% growth, according to Trump's post on the Twitter social network, where he is very active.
Trump added that unemployment in the US has been the lowest since 16 years. He said, that if the Congress has given an approval for the massive tax reliefs and reforms that he asked asking, the values ​​for the markets will continue to grow.
From November 8, the Dow Jones Industrial Average blue index rose by 25%. At the same time, the broad S&P 500 grew by about 20% and the Nasdaq by 27%.
In terms of unemployment, at 4.2%, it is the lowest since February 2001.
Trump did not hasitated to invoke the "fake media", to pay attention to the actual stock market growth figures since his election victory.
Market participants, however, are divided on whether the forthcoming tax reliefs are "reflected" in the prices of financial assets. Overall, they are unanimous that they will have a positive impact on the economy and stock prices in the medium term.

Did the bullish market for the dollar ended?

The US dollar fell sharply against other major currencies in the first half of the year. Investors, however, still have to be careful about declaring the end of the bullish market for green money, some experts say.
US interest rates are still far above those in other developed countries, so many experts recommend investors to prefer bonds outside US in their portfolios.
Consensus forecasts are still for a strong dollar this year, following expectations of further interest rates. And while Janet Yelllen made a step back in her last speech, investors are still expecting a further rise in interest rates this year.
The dollar has risen after Trump's election victory last November, following the expectation that the tax and health reforms planned by the new president will benefit the world's largest economy.
And while healthcare reform is difficult to implement, in the way Trump originally promised, very soon, most likely in August or September, we can expect to see more clarity about tax changes.
The latter may be highly positive for the US dollar and trigger a strong appreciation of the dollar against other major currencies.

Dollar declines in anticipation of the promised by Trump incentives

Dollar drops slightly on Tuesday as investors took a wait on the eve of the US president's speech in Congress.
By 11.48 GMT the dollar index slowed down by 0.01 percent to 101.120 against a basket of major currencies after a modest growth in the previous day.
The US currency strengthened after Trump called for a "historic" increase in military spending, which improved appetite of dollar "bulls" before the speech of the American president in Congress.
Dollar Index reached a peak of 14 years shortly after Trump won in the November election against the backdrop of expectations that he will present an ambitious program of fiscal stimulus.
However, the US currency has recently gave up positions, as the administration of Trump has not explained the details of the plans, particularly those regarding tax reform, so the focus has shifted to the President's appearance before the Congress.
Dollar slowed down by 0.15 percent against the yen to 112.50 yen.
The euro gained 0.06 percent against the dollar to $1.0590, moving away from the week peak of $1.0631 reached the previous day.

The new US President - Donald Trump!

The election campaign in the United States once again turned by 180 degrees, as director of the FBI Comey promised not to initiate criminal proceedings against Clinton. Polls claimed that her rating has risen sharply and the dollar jumped after falling at the end of the last week.
Survey results were wrong - we now know that they can not be trusted - it refers primarily to the European elections next year and the referendum in Italy in December.
Policy - is one big unknown. Nominally, as result of election, Trump controls both houses of the parliament, which means that he can implement large-scale political initiatives. However, given the fact that some members of his own party opposed his candidacy, he may have difficulty in complying with these plans - except, perhaps, replacing Obamacare with something else; Yellen's days at the Fed also are numbered (her mandate will end January 31, 2018), it is also likely to be implemented infrastructure investment and tax reform - the latter is most favorable for the US economy in the short term.
The first reaction of the market and further movement:
Safe assets have risen sharply in value against the USD, in particular this applies to JPY. Emerging-market and risk currencies, especialy MXN, collapsed. Given that such a reaction was expected, now that the results are already known, these movements quickly recoup in the opposite direction.
It's amazing how fast prices corrected after the first reaction. We can say that the uncertainty for some time reached a peak, and now we can return to a long-term long positions on the dollar and yen, and shorts in the euro.