Strengthening the dollar is the result of Trump's long-term plan

The Budget Committee of the Congress (NWO) conducted a comparative analysis of its own budget implementation forecast for the next decade and a set of budget proposals from the presidential administration. The amendments to the fiscal year 2019 were submitted in February and were considered by the Congress on April 13 and by the end of May, there were promising calculations.

So, the NWO recognizes that the level of federal debt in accordance with the budget of the president, should be equal in 2028. 86% and not 96%, as predicted by the NWO. The deficit of the federal budget should be less by 5.2 trillion, which is achieved, among other things, by a reduction in spending by 3.4 trillion for the declared period.

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Thus, Trump's plan is absolutely concrete and will be carried out despite opposition. Trump intends to significantly reduction costs, which will compensate for the loss of income at the initial stage of the tax reform plus create the most favorable conditions for doing business in the US, encouraging companies to repatriate capital and productive capacity where the rest of the world would partially finance the transition period. This is expressed in the strongest US pressure on major trading partners.

The program is complex and even if it has weaknesses, it has a chance of success. It is the deep study of details and the strict implementation of the plan that underlies the current growth in demand for the dollar, as a number of key steps to implement this program materialize right before our eyes.

Sanctionary pressure on China and the European Union will be maintained precisely on American terms, as it is the result of implementing a long-term plan rather than spontaneous emotions. In the future, the world will be fragmented more and more, and capital will seek safe harbors amid growing geopolitical and financial risks. It is exactly such a harbor that the United States should become.

In Italy, the failure of negotiations on the creation of a coalition increases the risk of chaos not only in the country, but also in the eurozone as a whole. The victory of Eurosceptics increases the risks of the demands on the EU to write off part of the Italian debt and change the rule of the budget deficit and the likelihood of Italy's withdrawal from the European Union in the event of a refusal increases many times. In fact, the euro area is in a serious political crisis that plays against the euro and is in the hands of the US dollar.

There is growth in yield spread. Despite the fact that the growth of yields on US bonds was braked in the last week, the general dynamics of doubts does not cause it. The 10-year old Treasury on Wednesday morning had a profitability of 2.86%, while similar German papers reported only 0.263.

The growth of the yield spread returns to the life of the Kerry-Trade strategy, where the US dollar is the yield currency, not the currencies of commodity or developing countries, as it was in the recent past.

Attempts by the ECB by way of "leaks" last Friday to repay the withdrawal of capital did not lead to success. The players simply did not pay any attention to the insider. This means the issue of the pace of completion of the repurchase program under current conditions is irrelevant. This conclusion creates a strong pressure on the euro in favor of the dollar.

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There is no reason to expect that the dollar's growth in the short term will end.

The week will end with the publication of a number of key macroeconomic parameters. Today ADP will present a report on the level of employment in the private sector for May, a second preliminary estimate of GDP growth rates and price indices for the first quarter, as well as the "Beige Book" of the Fed will be published. On Thursday, we will pay attention to the publication of April data on personal incomes and expenditures, and Friday will bring the May report on the labor market. Forecasts are favorable, both nonfarm payrolls and general wages are expected, positive expectations will support demand for the dollar until the end of the week.

The material has been provided by InstaForex Company - www.instaforex.com