Fundamental Analysis

Trump Lashes Out More Sanctions, North Korea May React


Trump Lashed More Sanctions On Korea
Dust Settled And US Indices Reacted To Fed’s Decision
German Election Would Be The Focus For The Weekend

Trump Lashed More Sanctions On Korea

The Asian markets are focused on the geopolitical tensions because the ongoing war of words between Trump and Kim Jong-un could explode.

Donald Trump announced some new tighter and tougher sanctions on North Korea. The sanctions will involve individuals, companies and banks which have anything to do with North Korea in terms of business. He has also asked Theresa May to join him to add more pressure on North Korea. He has called Kim Jong-un a 'rocket man' and the war of words between the two leaders has no sign of cooling off. Jim Jong has called President Trump 'mentally deranged'.

After these new sanctions, North Korea is not going to sit quiet. We do expect a reaction and it may be another nasty surprise for President Trump. If there is any kind of reaction from North Korea, the gold price could easily jump above the 1300 mark.

Dust Settled And US Indices Reacted To Fed’s Decision

The bears had it their way finally as the US markets closed in a negative territory for the first time in the last 10 days. The dust from the Fed meeting has finally settled and traders are showing some nervousness ahead of the potential upcoming rate hike. The US Jobless claims data came much better than the forecast and this reinforced the Fed outlook about the labour market. The Philadelphia Fed’s business outlook was also strong and came ahead of the expectations. If the Fed continues its rate hike glide path, repositioning in some portfolio rearrangement would be inevitable. The US financial sector is one of the most loved sectors by investors because higher rates would benefit the banking stocks.

German Election Would Be The Focus For The Weekend

Going into the weekend, a lot of attention will remain on the main event which will be unfolding on Sunday - the German elections. The German Chancellor is poised to win this election for the fourth time but the focus would be on whether she can secure the majority. Investors will be looking at her and they will be highly interested in the new form of collation which she is going to put together.

Sterling Traders To Focus On May

Another important event on Friday is the speech by the UK prime minister. The sterling has been roaring and literally paying no attention to how the Brexit negotiations have been choking off. For traders it is all about the BOE and when they will be increasing the interest rate. It is highly likely that the BOE may actually increase the interest rate in November but that doesn’t mean that the BOE will be on a rate hike glide path. The Brexit negations and the final outcome are both very significant. In her speech, May is expected to outline her new vision of Brexit. There are certainly chances that her new vision creates more political turmoil in the UK’s political system because the foreign secretary of the country has already made it clear that it is his way or the high way. So we would expect some major mover for the sterling

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