Trump again scares financial markets

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Russian ruble on Thursday declined following the decline in demand for risky assets in global markets. USDRUB by the end of the day added 27 cents (0.4%), rising to 61.60. EURRUB increased by 47 cents (0.7%) to 72.18. The morning markets went on the defensive after the unexpected trump’s tweet in which he announced the cancellation of the summit with the North Korean leader. This morning Kim Jong-UN said that is still willing to meet, than a few raised demand for riskier assets. In particular, the USDJPY (a strong indicator of demand for risks), recovering from losses on Wednesday and Thursday.
Still, you rely too much on this growth. Japanese markets increased, but mainly due to “protective” sectors. Automakers are again in the red on concerns over the proposed trump’s 25% tariff on car imports in the United States.
Outside of the stock market it should also highlight the drop in oil prices on the dollar or 1.3% to $78.70 per barrel of Brent. Obviously, worries about the state of world trade and growth stocks, as reported a day earlier, are behind the current weakening of oil. The tension of geopolitics in this case does not cause the growth of oil as the source of conflict this time is not in oil-producing countries, and very close to the major consumers of raw materials (China, Japan, South Korea).
Rising geopolitical tensions, oddly enough, can damage the dollar at this stage of the monetary cycle. Its growth last month based on expectations of more decisive rate hikes in the US due to the strong data. Tensions in global markets may force the fed to act careful, as it was in the 2015-2016 academic year. when it was only one increase per year against more aggressive plans.
Among the main counterparts of the ruble dominated the decline in the morning: the Turkish Lira returned to the decrease, although it was slightly more measured. Mexican peso and South African Rand slightly lose from the beginning of the day. Retreating Australian and canadian dollars.
In total, by the beginning of trading on Friday on the Russian market we have a moderately negative external background, which can cause a rise in the currency against the ruble. This idea supports also the proximity of the currency to important support levels. Probably the mark of 61 per dollar and 72 per Euro are not yet ready to submit to the ruble and look attractive levels to buy the currency.
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Alexander Kuptsikevich,
Financial analyst,
FxPro