Dollar Rally Continues – 21 Nov 2016

Dollar Rally Continues – 21 Nov 2016

Today we got a very light economic calendar with complete lack of macroeconomic announcements and significant forex movements. Traders should focus for any possible breaking news or leaks about the upcoming OPEC meeting, focus on how Trump will staff his cabinet and of course follow the speech of Mario Draghi which can give some highlights about the future monetary policy.

Another issue that matters today and can be very important later is that Angela Merkel announced that she will seek a 4th term as a Germanys leader. Merkel is very unpopular between anti austerity and Eurosceptic parties in Europe. Another five year governing of Merkel will bring closer Europe to new meltdown and possible break. Italy and French political rise of anti-European political parties can demolish the European future may create a ten times bigger crisis than we got with Greece in 2010. On one hand Germany wants structural reforms and austerity, on the other hand Italy and France demands higher deficit spending and a greater infrastructure spending program that will increase employment and growth in a long term.

The rise of Trump will lead to a domino of nationalism in Europe where many big parties like French nation front of five start movement seems that are very close to power. Now it seems clearer than ever before that the last 25 years strong trend of globalization has lost momentum and the reverse at least for few years is possible. The nation state against the global state seems that excels recently.

USD continue to gains strength. High expectations for a hike next month, political uncertainty in Europe (Italian referendum), outflow of emerging markets, higher inflation expectations from Trump’s infrastructure spending plan will keep green back strong.

Daily Key points:
• The dollar is up 7.5% vs the yen over the last 2 weeks best performance since 1988
• Gold near 6-month low on U.S. rate hike expectations
• Fed rate hike odds approach 100% in anticipation of Trump’s economic policy
• Russian President Putin: Cannot say if oil freeze is 100% certain, however there is a high probability
• Fed’s Kaplan: Policy divergence could further strengthen the US dollar
• ECB’s Praet: ‘’We will take a comprehensive look at inflation outlook at Dec meeting’’
• Iraq oil minister is optimistic OPEC will lead to an output deal
• China Devalues Yuan For Longest Streak Ever To 8 Year Lows

Daily Economic calendar:
Country Event Importance Previous Expectations Follow Times
Europe ECB President Draghi Speaks High N/A N/A Euro 19:00

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