- Chinese authorities may intervene to stem the weakness in Yuan
- Donald Trump is being vocal again about the Yuan
- Trump extended an invitation to Vladimir Putin
US futures are trading lower on the back of the Trump comments on the Chinese Yuan weakness. The Chinese authorities have shown signs that they may intervene to stem the weakness in the currency. But the fact that Donald Trump is being vocal again about the Yuan weakness is a matter of concern for traders and this is dragging the stock futures lower.
Moreover, there are also concerns about Trump and Putin’s meeting. There is very little detail in relation to what both leaders discussed in their first meeting which lasted nearly two hours. The uproar about this meeting has intensified even further after Donald Trump’s conflicting statements about this meeting. Investors want clarity and this is far from this. And, now, Trump has extended an invitation to Vladimir Putin for the second summit in Washington.
Another major factor which is also weighing on the market is the independence of the central bank and the tradition of avoiding comments on monetary policy.
It wasn’t a long when we heard the Turkish president, Tayyip Erdogan, showing his discomfort about the central bank’s policies. Investors took full action against the currency and traders witnessed the massive sell-off in Turkish Lira. His policy was disliked and criticised not only among institutional investors but also by many other stakeholders around the globe.
Now it is the president of the United States of America, Donald Trump, who has decided that he needs to be vocal about the role that the Federal Reserve Bank is playing. Increase in the interest rate at this pace isn’t something that he is going to tolerate.
For the record, the current Fed President, Jerome Powell, is chosen by him. The Fed thinks that they can raise interest rate by two more times this year alone. Jerome Powell, the Fed President, was confident in his latest testimony about the health of the US economy, inflation and the policy which the Fed has adopted.
Obviously, he failed to factor in the fact if the president of the United States is happy or not. Another indicator which perhaps they should put on their dashboard. After Jerome’s testimony, the dollar kissed the highest point for the year once again.
However, we have seen the dollar index pulling back from this level on the back of the news that US president isn’t happy with the situation. If the president does start to press hard on this issue, we would have a major problem for the dollar index. One thing is for certain, it is in president’s favour that the interest rates should remain low given the fiscal policy his team is adopting.
