- Another major blow for Trump made traders angry
- French GDP matched the forecast and the euro moved higher
Over in Europe, the French GDP data brought more light for the Eurozone’s economy. The problem child of the Eurozone is no longer a problem child, in fact, it has grown up and is living up to the expectations. The GDP number matched the forecast of 0.5% and this would stem the rally for the euro further. However, the overall focus in the market is on a much bigger picture which has taken over every single headline.
Trump had another fresh blow and this one is really an ugly one. The Senate did what Trump was not expecting, the repeal of Obamacare was blocked. It appears that the Obama Care has become a nightmare for Trump and no good news for the markets as well. The ability of Trump to deliver on his so many promises such as tax and stimulus packages are really shattered. This is going to have a negative impact on the markets as the trump trade would wind up even further. It will also bring more bleeding for the dollar which is already bruised badly.
So the trade would be to go heavy against the Trump trade and that is what most investors would focus on. Let’s just say that without those stimulus packages and the tax reforms, we could say good bye to the Trump dream. The GDP growth of 3 percent or higher which he promised is not going to see the daylight anytime soon.
The only card which is left for President Trump to play is perhaps the debt ceiling and he may have some chance to twist the arms of others to get what he wants. The other option is that he just moves on from here and admit defeat.
The only element which could support the dollar today is the US advance GDP data and the bar is set high. The forecast is 2.5% while the previous reading was at 1.4%.
If the repealing of Obamacare is bad news for the dollar, it brings fresh fuel for the gold rally. We do think that maybe after a small pullback in the gold price, the path of least resistance would remain skewed to the upside. The Fed would have to be very careful in terms of their current strategy.
