Weekly Wrap – Trump Tweets the Dollar and the Equity Markets into the Red…

Trump and the FED at odds coupled with an escalation in the U.S – China trade war distracted the majors from a better week on the data front.
Bob Mason

The Stats

It was a particularly quiet week on the economic calendar in the week ending 23rd August.

A total of 35 stats were monitored throughout the week, compared with 61 in the week prior.

Of the 35 stats, 22 came in ahead forecasts, with 8 economic indicators coming up short of forecast. 5 stats were in line with forecasts in the week.

Looking at the numbers, 21 of the stats reflected an upward trend from previous figures. Of the remaining 14, 11 stats reflected a deterioration from previous.

While the economic data was skewed to the positive, the Dollar took a dive on Friday extending losses from the week. Market reaction to Trump’s Friday Tweets did the damage.

Central bank monetary policy, geopolitical risk and economic data were all in focus throughout the week.

The U.S Dollar Index (“DXY”) fell by 0.63% in the week to 97.587.

Out of the U.S

It was a relatively quiet week.

The markets had to wait until Wednesday for July existing home sales numbers that had a muted impact.

Of greater significance were private sector PMI numbers on Thursday. The U.S manufacturing sector contracted in August and the services sector saw a material slowdown in growth.

With negative sentiment towards the economy, the numbers were yet more red flags for the FED to consider.

Wrapping up the week were July new home sales that also had a muted impact on the Dollar.

Of greater influence were the FOMC meeting minutes released on Wednesday and FED Chair Powell’s speech on Friday.

In line with the minutes, Powell reiterated the FOMC willingness to step-in should the need arise. For the markets, this was considered a green light for a September rate cut.

Of even greater significance on Friday was yet another escalation in the U.S – China trade war.

China announced tariffs on U.S goods, which include auto and crude. Trump responded, not only to Powell’s speech but to China’s move.

In the equity markets, the U.S majors closed out the week in the red once more. A Friday sell-off dragged the majors into the red for the week. The NASDAQ led the way, falling by 1.83%, with a Friday 3% slide doing the damage. The Dow and S&P500 weren’t far behind, with losses of 0.99% and 1.45% respectively.

Out of the UK

It was a particularly quiet week on the economic data front. CBI Industrial Trend Orders for August was the only influence on the Pound in the week.

While positive, the downward bias was of little comfort, however, following the UK’s contraction in the 2nd quarter.

Outside of the numbers, Brexit was of far greater significance. Both German Chancellor Merkel and French President Macron left the door ajar for further negotiations.

The Pound ended the week up by 0.96% to $1.2266.

For the FTSE100, it was another week in the red, with the index falling by 0.31% off the back of a 1.88% fall from the previous week.

Out of the Eurozone

It was another particularly busy week on the economic data front.

The Eurozone’s July inflation figures kicked off the week. Monday’s numbers showed an easing in inflationary pressures supporting a near-term move by the ECB.

On Thursday, prelim private sector PMI numbers for August failed to provide support to the EUR. While better than forecasted and improving on July, optimism faded further as did new export orders. The figures continued to raise the threat of a Eurozone recession.

Outside of the stats, the ECB released its monetary policy meeting minutes that affirmed the threat and talked of stimulus next month.

The EUR ended the week up by 0.49% to $1.1144 against the Dollar. The gains came off the back of a 0.58% rally on Friday stemming from an escalation in the trade war.

For the European major indexes, it was a better week for the majors. The CAC40 and DAX30 rose by 0.49% and 0.42% respectively.


It was another bearish week for the Aussie and Kiwi Dollars. The Aussie Dollar fell by 0.34% to $0.6756, with the Kiwi Dollar down by 0.37% to $0.6405.

For the Aussie Dollar

It was a particularly quiet week, with no material stats to provide the Aussie Dollar with direction.

The lack of stats left the markets to focus on the RBA meeting minutes on Tuesday. The minutes provided support to the Aussie Dollar early in the week, as there was no talk of any further rate cuts near-term.

Unsurprisingly, the trade war, deteriorating global economic conditions, and a U.S Treasury yield curve inversion added pressure.

For the Kiwi Dollar

Economic data was limited to 2nd quarter wholesale inflation figures on Monday and 2nd quarter retail sales numbers on Friday.

An unexpected jump in wholesale inflation and better than forecast retail sales figures provided support.

The figures were not enough to pull the Kiwi out of the doldrums, however, as concerns over the global economy weighed.

For the Loonie

It was a busier week than normal on the economic data front.

Key drivers in the week included July inflation figures from Wednesday and June retail sales figures on Friday.

A pickup in inflationary pressure provided the Loonie with support, though it may not be enough to prevent a dovish BoC next month.

Retail sales came in ahead of forecast on Friday, with core retail sales rising by 0.9% in June. Core sales had fallen by 0.4% in May. Retail sales were flat, however, following a 0.2% fall in June, limiting the upside for the Loonie.

Of less influence were June manufacturing sales and wholesale sales figures from Tuesday and Thursday.

The Loonie ended the week down by 0.11% to C$1.3283 against the Greenback.

For the Japanese Yen

Economic data included July export figures on Monday, private sector PMIs on Thursday and inflation numbers on Friday.

Japan saw its trade balance fall into deficit in July, sounding the alarm bells once more. The effects of the U.S – China trade war are showing.

This was also evidenced by disappointing a manufacturing PMI on Wednesday that suggested more pain to come.

Inflation figures at the end of the week had a muted impact. The core annual rate of inflation continued to sit well below the BoJ’s objective.

Geopolitics and sentiment towards FED monetary policy were ultimately the key drivers, however.

For the week, the Japanese Yen rose by 0.93% to ¥105.39.

Out of China

Out of China, it was a quiet week on the economic data front. With no material stats to influence the markets, a move by the PBoC to support the economy supported risk appetite.

The PBoC introduced reforms to lower interest rates to support the economy amidst the ongoing trade war.

The Yuan ended the week down by 0.75% to CNY7.0956 against the Dollar.

The Trade War

On the trade war front, there were no positives to consider, however…

On Friday, China announced tariffs on $75bn worth of U.S imports, which included reintroducing tariffs on autos. China also targeted U.S crude…China’s move came ahead of FED Chair Powell’s speech and resulted in a Twitter tantrum, as the U.S President retaliated.

Trump said that U.S companies should cut ties with China. The tariff retaliation also came. The U.S President stated that he would raise tariffs from 25% to 30% on $250bn worth of Chinese goods and from 10% to 15% on an additional $300bn worth.

Judging by Trump’s reaction to Powell and China’s latest move, it looks like Beijing is winning the war. Next up, the G7 which kicks off today.

Don't miss a thing!

Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All

Top Promotions

Top Brokers

The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.