Hi Everybody,
Unpredictable doesn’t even begin to describe the actions of US President Donald Trump.
Just a few days ago he was preparing the ground to back the Assad regime, now he’s bombing them.
Certainly, chemical weapons are horrible and it’s good to see someone taking a stance against them but the use of chem-warfare in this bloody conflict is certainly not new. So what really caused Trump to flip?
The bigger questions are still ahead of us though. How will Russia react? Putin has been backing Assad since the beginning. And the bigger question, how will US policy be going forward? Is this a one time deal to punish the regime, or is he now going to fight Putin to dethrone Assad?
Or…. was this whole thing just a charade to steer the conversation with Chinese President Xi Jinping, who is currently being hosted at Trump’s golf resort in Florida?
Too many questions for one morning. All will be answered soon enough. In the meantime, let’s take a look at the market reactions and what’s coming next.
-Mati
Today’s Highlights
- Safe Haven reaction to Syria
- Going Nuclear!
- BIG Jobs Report Today
Please note: All data, figures & graphs are valid as of April 7th. All trading carries risk. Only risk capital you can afford to lose.
Market Overview
The drastic and sudden change of policy by the Trump administration on the war in Syria caused a bit of a stir in the financial markets.
DJ Trump has just poured a barrel of gasoline on an already raging fire. A war that seemed to finally be coming to an end is suddenly looking like it can spread.
Not the first time Trump weakened US dollar
As can be expected, the reaction has been a sweeping flight to safety.
You can see the moment of impact most clearly in the price of Gold. As the conflict is in the Middle East, the price of Crude also spiked.
Stock markets around the globe are down today except for the Nikkei 225 and the Australian ASX 200, which are slightly up.
The Japanese Yen also surged as the number one safety play at the moment.
Bitcoin was not heavily affected. After seeing $1200 this morning, we’re now seeing a bit of a pullback.
Going Nuclear
No, we’re not talking about actual nuclear warfare. Though the events of this morning have made that option slightly more possible.
I’d like to downshift here and talk about internal politics in the USA.
As we know, there’s an empty seat on the benches of the United States Supreme Court. Obama wanted to fill it with a guy named Merrick Garland, but the Republican party blocked the nomination, hoping that a republican win in the White House would offer a more conservative candidate.
Well, they got what they wanted. Donald Trump has nominated Neil Gorsuch but of course the Democrats are still sore that their candidate didn’t get in so they’re doing everything they can to block him.
Republicans will now drop the bomb. The Nuclear Option is a procedure for the senate to override the current system that requires 60 votes to confirm the new Justice and they’ll be able to confirm him with just 51 votes.
This option is certainly not as drastic as it’s name and has very little negative consequences. It simply highlights the refusal of the two parties in the US Government’s ability to work together as a team.
Neil is definitely not the most controversial judge in history, but it should be noted that the guy he’s set to replace, Justice Antonin Scalia, passed the senate with a unanimousa vote in 1986.
Jobs Day!
Usually, this would be the headline but Emperor Trump decides the headlines these days.
The NFP report is usually the biggest economic number to impact the financial markets every month. Today is no different.
Analysts are expecting to hear that more than 174 Thousand jobs were added to the US economy in March. Anything less, even a slight miss, would be seen as a large disappointment to the already fragile markets.
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Also, keep a close eye on the Average Hourly Earnings in today’s report. A sudden growth in this number would be viewed as confirmation that the US economy is indeed on track and that current market prices are justified.
What else?
Lots of data coming out of the UK at 9:30 AM London time. Followed by a speech from BoE Governor Mark Carney who will be next door to our UK office today at Thompson Reuters in Canary Wharf.
Also, keep a close eye on the USDZAR, which is still cringing from South African President Zuma’s snap cabinet shuffle. Any update or headlines on the deteriorating situation could send the Rand much weaker.
As always, I look forward to hearing your questions, comments, and feedback on this report. Wishing you an amazing weekend!
Best regards,
Mati Greenspan
Senior Market Analyst
