Euro, yuan and ruble fail in trying to defy the attacks of dollar
Donald Trump has taught the financial markets his major rule. No rules. Even if this rule doesn’t work. The US-EU negotiated truce is seen as a break before the next round of the massive trade war. Chinese headlines these days are all about that the USA wants to turn China into its vassal, and the size of the Asian economy doesn’t allow it to bury its head in the sands, like an Ostrich. The Elephant will also fail. And with Russia, it’s a funny story: the closer is the US president to it, there more are Western sanctions. Admit, such transformations make Forex life much more interesting than it used to be:
- Honey, is it fun to be around me?
- Around you, a little fool, it is funny…
The meeting of the U.S. and the Russian presidents in Helsinki was peaceful, which was seen by the U.S. policymakers as a catch. There is no smoke without a fire, and if Donald Trump is friendly to Putin, the latter might have helped him win the election in 2016. Now matter how much the U.S. president tries to express his support to Moscow, he will always be a free barrister for it. The barrister, you know, is worse than the prosecutor. The information, obtained by the media, that the US congress is going to ban US investors to buy new issues of the Russian bonds and to block dollar-contracts of the largest Russian lenders sent the ruble quotes down to the two-year low. The entire investment world is focused on the news from Russia. It has never known such insolence! Let it know more!
I can’t say that the USA follows the rule “Don’t insult the mushroom picker! They have a knife”. Someone has a longer blade, someone has a shorter one. Moscow has no blade at all now, as it has sold off the entire stock of the US Treasuries. It was like a mosquito bite for Washington, but one fool is known to make many. Even if the Chinese say that Donald Trump has such big eyes, that there is hardly any room for his brain, but any patience has its limit. You shouldn’t expect the Elephant to meekly obey the Lion; especially since it has enough weapons. Trade war is just beginning, it is going to develop into the currency war soon. Forex gives enough circus. Buy enough popcorn!
As for the ruble, its users are being persuaded that the life is short and they won’t have to suffer for long both at home and abroad. Pension and tax reforms, Western sanctions and other bad luck build the character and check the ability of USDRUB bears to fight back. Yes, the fortune doesn’t smile on them today, but everything changes. The Russian currency will catch its luck one day… After all, there is huge gap between the rumours and the facts. Once one bothers the Russian government bond market, other markets will be bothered as well. At least, the U.S. Treasury says so; however, the U.S. Congress doesn’t seem to believe. It is gone on holiday. Let us take a rest as well...
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.