Dollar fails Powell’s test, China and Trump keep tensions

Aug 26, 2019

For the whole last week we were waiting for a symposium in Jackson Hole to be held (The Economic Symposium, held in Jackson Hole, Wyoming, is attended by central bankers, finance ministers, academics, and financial market participants from around the world. ). Fed Chairman Jerome Powell's speech on Friday was the main event. The markets were waiting for the “official” confirmation of monetary easing by the Fed, the ECB and other central banks.

Attention focused on a speech by U.S. Federal Reserve chief Jerome Powell for news on whether it will cut interest rates for a second time this year to boost the world's largest economy. But at the same time, he did not specify a time limit.

China intends to raise tariffs on US imported goods total $ 75 billion the decision was made in response to the USA. Besides, the import tax on American cars and auto parts will be increased.

Trump, of course, reacted extremely nervously to such actions by China, promising to take retaliatory measures. China has a deserved reputation for intellectual property theft. On Friday, Trump estimated China robs the US of “hundreds of billions” a year in ideas. So there is a reason to believe that a very hot and hectic week awaits us. In this light, buying safe-haven assets seems like a good trading idea. But once again we note that the choice of the entry point is extremely important.

The upcoming week promises to be calm. Attention should be paid only on the US GDP. Otherwise, the attention will be focused on the confrontation between the USA and China, as well as the Fed.

Our trading preferences this week: selling the dollar, finding points for buying gold and the Japanese yen, buying the British pound and selling the Russian ruble. Also, oil sales seem appropriate.