The dollar is waiting:Trump can "stir up" the market

The euro-dollar pair continues to trade in a flat: bears can not lower the price in the area of the 13th figure, bulls, in turn, are not able to even approach the 15th figure. The dynamics of trading is not characterized by volatility, and traders can not determine for themselves the vector of movement of the pair against the background of a half-empty calendar and new year holidays in China. In addition, the market is waiting for a rather important event, which will take place at 21:00 North American Eastern time.


We are talking about the speech of US President Donald Trump: he will speak in Congress with the annual message "on the situation of the country." This event was supposed to take place back in January, but because of the shutdown, the speaker of the House of Representatives did not allow the head of the American state to voice his speech in Congress - and Trump, in turn, did not violate the centenary tradition and refused to transfer the place of the keynote speech. But now, taking advantage of the temporary "truce", he will nevertheless express his opinion on current events in the United States and outside his country.

According to the overwhelming majority of experts, the president can provoke quite strong volatility among dollar pairs. Against the background of a half-empty economic calendar, traders simply cannot ignore such an important information occasion. Moreover, Trump will probably touch on two topical issues - firstly, this is the US-China negotiations, and secondly - the prospects for the emergence of a new shutdown. Depending on the tone of his rhetoric, the dollar will choose the path of its direction: either it will again be under strong pressure, or it will begin to be in demand, in the light of increasing anti-risk sentiment.

On the eve of this major political event, the White House published excerpts from a future speech. The promulgated text is, if not peaceful, then quite diplomatic: the president calls on the members of Congress to "reasonable cooperation" and cooperation in the migration issue, also calling for "forgetting past wounds." Such mild and vague rhetoric could not affect the mood of the markets, but yesterday's events suggest that the full text of the speech will be very different from the published "demo version".

The fact is that the day before yesterday, Trump blamed Democrats in his Twitter account for ignoring the problem of illegal migration, mentioning a caravan of migrants heading from Mexico towards the US border. His post was obviously emotional, judging by the frequency of use of capital letters and exclamation marks. All this suggests that Trump is still not ready to compromise with the Democratic Party on the construction of the border wall - and this, in turn, means that on February 15, the United States of America may start a shutdown again.


Anticipating such an algorithm of events, some political analysts warn that Trump can take a rather tough position on this issue, since he has no way back. A record-breaking shutdown caused enormous losses to the country, and if in the end the president did not "press" the situation to a logical end, he would suffer "personal" losses, in the context of a political rating.

Therefore, experts do not exclude that Trump will again threaten to impose a state of emergency in the country if negotiations with Democrats about financing the construction of a wall along the border with Mexico once again come to a standstill. It is also worth recalling that just a week ago, Trump, in an interview with an influential American publication, said he would not agree to a compromise if lawmakers in exchange offered to adopt a bill that grants citizenship to illegal immigrants who came to the United States as children. He clarified that these questions are "not subject to exchange" and cannot be compared in this context. In other words, the risks of a repeated shutdown are rising again, and Trump's rhetoric can only provoke nervousness over such prospects, putting strong pressure on the dollar.

As for the US-China talks, here, according to a general expectation, the president will voice optimistic assessments - and this fact is likely to be ignored by the market. If Trump admits that there are intractable problems (in fact, having announced the continuation of the trade war since March 1), then the demand for the dollar will increase, as panic sentiments will resume among traders. But this scenario is unlikely, given the ongoing negotiation process between Beijing and Washington.

Thus, Trump can "stir up" a phlegmatic market - but only if he allows the introduction of a state of emergency next week. China will also be in the center of attention of traders, but in this case the president is unlikely to disclose the details of the negotiations (perhaps with the help of common phrases). If the head of state shows restraint and diplomacy, then the configuration of dollar pairs will not undergo fundamental changes.

The material has been provided by InstaForex Company -