Commodity Currencies Explained (Part I)

Let’s start by defining what could be called a commodity currency (or commodity pair).

Generally, a commodity currency represents a currency from a country or geographical zone that produces specific commodities which will account for most of its exports.

Some examples of currencies which could be considered as commodity currencies are presented in the following table:

Currencies Top Material Exports
Argentine peso (ARS) Soybean meal ($8.81B), corn ($6.19B), delivery trucks ($3.83B), soybeans ($3.47B), soybean oil ($3.38B), bran ($292M), other vegetable residues and waste ($232M), and ground nut oil ($131M)
Australian dollar (AUD) Iron ore ($67.5B), coal briquettes ($51.5B), petroleum gas ($34.1B), gold ($25.4B), aluminium oxide ($5.6B), sheep and goat meat ($3.07B), and wool ($2.26B)
Brazilian real (BRL) Soybeans ($26.1B), crude petroleum ($24.3B), iron ore ($23B), corn ($7.39B), sulfate chemical wood pulp ($7.35B), poultry meat ($6.55B), frozen bovine meat ($5.67B) and raw sugar ($5.33B)
Canadian dollar (CAD) Crude petroleum ($67.8B), cars ($40.9B), gold ($14.6B), refined Petroleum ($12.3B), vehicle parts ($10.8B), sawn wood ($6.35B), raw aluminium ($5.45B), potassic fertilizers ($5.27B), rapeseed ($3.23B), and rapeseed oil ($2.6B)
Indian rupee (INR) Refined petroleum ($39.2B), diamonds ($22.5B), packaged medicaments ($15.8B), jewellery ($14.1B), cars ($7.15B), Rice ($6.9B), Crustaceans ($4.67B), and Non-Retail Pure Cotton Yarn ($2.86B)
Indonesian rupiah (IDR) Coal briquettes ($20.3B), palm oil ($15.3B), petroleum gas ($8.32B), cars ($4.52B), gold ($4.01B), lignite ($2.91B), stearic acid ($2.76B), uncoated paper ($2.37B), and coconut oil ($1.9B)
Malaysian ringgit (MYR) Integrated circuits ($63B), refined petroleum ($17.8B), petroleum gas ($11.5B), semiconductor devices ($9.65B), palm oil ($8.91B), rubber apparel ($4.37B), other vegetable oils ($1B), copper powder ($873M), asphalt mixtures ($417M), and platinum clad metals ($127M)
Mexican peso (MXN) Cars ($53.1B), computers ($32.4B), vehicle parts ($31.2B), delivery trucks ($26.9B), crude petroleum ($26.6B), tractors ($10.7B), beer ($5.07B), tropical fruits ($3.6B), and railway freight cars ($3.57B)
New Zealand dollar (NZD) Concentrated milk ($5.73B), sheep and goat meat ($2.62B), rough wood ($2.31B), butter ($2.29B), frozen bovine meat ($2.09B), casein ($613M), and honey ($237M)
Nigerian naira (NGN) Crude Petroleum ($46B), petroleum gas ($7.78B), scrap vessels ($2.26B), flexible metal tubing ($2.1B), and cocoa beans ($715M)
Peruvian nuevo sol (PEN) Copper ore ($12.2B), gold ($6.76B), refined petroleum ($2.21B), zinc ore ($1.65B), and refined copper ($1.62B), animal meal and pellets ($1.54B), lead ore ($1.01B), fish oil ($434M), and buckwheat ($139M)
Russian ruble (RUB) Crude petroleum ($123B), refined petroleum ($66.2B), petroleum gas ($26.3B), coal briquettes ($17.6B), wheat ($8.14B), semi-finished iron ($6.99B), coal tar oil ($4.49B), raw nickel ($4.03B), and nitrogenous fertilizers ($3.05B)
South African rand (ZAR) Gold ($16.8B), platinum ($9.62B), cars ($7.61B), iron ore ($6.73B), and coal briquettes ($5.05B), manganese ore ($3.16B), chromium ore ($1.92B), titanium ore ($583M), and niobium, tantalum, vanadium, and zirconium ore ($480M)
Swiss franc (CHF) Gold ($59B), packaged medicaments ($46.2B), blood, antisera, vaccines, toxins, and cultures ($32.9B), base metal watches ($13.6B), jewellery ($10.9B), precious metal watches ($7.32B), and hydrazine or hydroxylamine derivatives ($501M)
US dollar (USD) Refined petroleum ($84.9B), crude petroleum ($61.9B), cars ($56.9B), integrated circuits ($41.4B), vehicle parts ($41.2B), medical instruments ($29.5B), gas turbines ($28.1B), aircraft parts ($16.3B), and orthopedic appliances ($12.1B)
Vietnamese dong (VND) Broadcasting equipment ($42.3B), telephones ($18.2B), integrated circuits ($15.5B), textile footwear ($10.6B), and leather footwear ($6.43B), coconuts, Brazil nuts, and cashews ($3.16B), fuel wood ($2.05B), cement ($1.39B), metal-clad products ($1.37B), and cinnamon ($175M)
West African CFA franc (XOF) Gold ($11.66B), cocoa beans ($3.84B), refined petroleum ($2.64B), rubber ($1.08B), raw cotton ($1.04B), and crude petroleum ($941M), cocoa paste ($795M), other oily seeds ($407M), Phosphoric Acid ($346M), coconuts, Brazil nuts, and cashews ($280M), ground nuts ($192M), zinc ore ($173M), raw zinc ($155M), electricity ($141M), cocoa shells ($115M), calcium phosphates ($95.7M), radioactive chemicals ($59.6M), rough wood ($59.5M), raw copper ($49.4M), Petroleum Gas ($42.5M), non-fillet frozen fish ($356.1M), other vegetable residues ($25.4M), and aluminium ore ($3.17M)

Data: The Observatory of Economic Complexity (OEC)

(Bold: products which the country/economic area was the world’s biggest exporter in 2019)

For active trading purposes, the ones highlighted in yellow would be characterised as freely floating and more liquid currencies. Thus, they would also be more accessible and less costly (with lower fees) to trade.

For hedging purposes, the others would present some advantages to the commercialisation of their associated natural resources, even though they would rather be considered more exotic currencies.


Here is a representation of some key commodity currencies presented in the above table on a weekly timeframe against the US dollar (reference currency):

Graphical user interface, chart, applicationDescription automatically generated

Each chart was represented within 2-standard deviation Bollinger Bands based on a 20-period simple moving average (in orange), a 50-period simple moving average (blue curve), a 200-period simple moving average (the black curve) and in the pane below is a 14-period relative strength index (in blue) to which was applied a 9-period simple moving average (red curve).

All those charts are displayed over a 2-year historical period.

In the next article I’ll focus on highlighting some correlations which may exist between key natural resources and the currencies in which they are usually traded.

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Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Sebastien Bischeri
Oil & Gas Trading Strategist

* * * * *

The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.


Russian Central Bank Governor Speaks at Press Conference

Below are the highlights of her comments:


“The decision is based on a significant review of macroeconomic forecasts… The notable policy step we have taken is needed in order to bring inflation in line with the target.”

“Deposit and loan rates were not as quick to react to the policy rate adjustment as the OFZ bonds, today’s decision is aimed at speeding up this process.”

“The neutral (policy rate) range remains at 5-6% given inflation close to 4%… It is premature to say whether this rate hike is going to be the last one in the policy tightening cycle.”

“We considered the options of raising the rate by 50, 75, and 100 basis points.”

“We currently see the policy rate in the 6-7% range next year which will produce inflation at 4.0-4.5%.”


“Our policy will not harm economic growth rates.”


“Carry trade flows have slightly increased against the backdrop of the rate hike. This does not significantly affect the rouble exchange rate, in our view.”

“Equipment purchases using the national wealth fund money may also affect rouble exchange rate, such influence needs to be further evaluated, it is better to invest the fund’s money into projects that boost Russia’s economic potential.”


“The first signs of inflationary pressure weakening appeared in the first half of July but this is not yet sufficient to talk about sustainable inflation slowdown.”

“We must not put up with elevated inflationary expectations so that they do not anchor on this high level.”

“We expect that in annual terms the decrease in inflationary pressure will become visible in autumn.”

“There are many reasons to analyse the inflation target, we will look at how the target is formulated, its level and whether it will be a point or a range. We will discuss this for a year with experts, academics, business representatives and the public.”


“According to our forecasts, the OPEC+ oil output increase will add 0.1 percentage point to GDP growth in 2021 and 0.2-0.3 percentage point in 2022.”

“A good (grain) harvest may provide for more significant food price decline.”

“The state budget may be executed with some surplus.”


“There are signs of overheating in the unsecured loan market. Taking into account data for the last few months, we will decide on additional measures to cool down this segment.”

“Geopolitical risks are also something to which we continue to pay attention.”


“We are not changing our approach to bank regulation because of this (change in national wealth fund asset structure), but our banking regulation already includes measures aimed at making rouble deposits and loans more attractive and foreign currency ones less attractive.”


“ESG is one of the key factors that will have an ever increasing influence on Russia’s economy. We will regularly carry out stress tests in order to assess the impact of the carbon tax on our economy.”

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Darya Korsunskaya, Anastasia Lyrchikova and Tatiana Voronova; Writing by Olzhas AuyezovEditing by Katya Golubkova)

COT: Accelerated Dollar Selling Into 2020

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

For the full Forex Report and Financials Report.

Five weeks of selling has driven the speculative dollar long against ten IMM currency futures and the Dollar Index down to just $5.6 billion, the lowest bets on a stronger dollar in 18 months. The first week of trading was particularly brutal with the dollar being sold against all the major currencies.

The carry supported MXN reached a nine-month high last week and is now challenging the dollar as the most popular long. The GBP long meanwhile reached 16.5k lots, the most bullish since May 2018 while EUR net shorts were trimmed to the least since November.

Leveraged fund positions in bonds, stocks and VIX
What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Reducing Power of US dollar as the World Currency proves to Be Trend

After repeated warnings over the past few years, Turkey and Russia signed recently an agreement to increase the use of rouble and lira in cross-border payments, when Turkey signed to join the Russian alternative to SWIFT, the international telecommunications protocol used by banks worldwide, including central banks.

Even though SWIFT is an international association owned by its members, with more than 10,000 banks worldwide using its systems for interbank transactions, the network safety began to be questioned after series of cyberattacks back in 2015 and 2016. Furthermore, confidential information on theft of $101 million from the Central Bank of Brazil leaked out.

For the first time ever since SWIFT was launched, these cases raised doubts on the system safety, and brought about competitors, including Russia, to intensity their efforts in SWIFT alternatives development.

As part of the Turkish agreement, local banks and businesses will connect to the Russian version of the Swift system. Additionally, the infrastructure in Turkey should be improved so as to allow Russia introduce their MIR cards as an alternative to MasterCard and VISA in the country.

Apart from Turkey, Russia also signed agreements with China to strengthen trade between the two countries, and to increase the percentage of bilateral trade in yuan and rouble. The bilateral trade between China and Russia rose from $69,6 billion in 2016 to $107,1 billion last year. China is Russia’s largest trading partner both for imports and exports.

India is likely to join the Russia’s SWIFT alternative as well since Washington keeps threatening New Delhi with sanctions over the purchase of Russian missile defence system. India’s participation is probable to be negotiated on BRICS summit in Brasil.

Russian president Putin warned of potential impacts of American sanctions, which could influence the value of dollar in global financial system and make more countries seek for alternatives to SWIFT. And that should be kept in mind even though American president Trump expresses his positive attitudes towards Turkish president Recep Tayyip Erdogan nowadays.

For example, the European Union despite being Washington’s ally attempted to launch their own alternative to Swift to make payments to Iran during Trump’s sanctions towards the country.

As Putin warned, the American sanctions against Russia are a “colossal strategic mistake” and can jeopardize the unity of dollar-based global financial system.

It is probable that dollar is getting weaker against EUR and CNY in the long term. According to BIS statistics, dollar was parity counterpart to about 82 % in nominal transfers in the beginning of the year. Unless the US politics rationalize, the situation will change in the short term.


Syam KP, Chief Analyst at Gulf Brokers

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Rouble starts May on the Back Foot

If you follow us for some time, that should not be a surprise as we were anticipating this action for quite a long time. Before we will get any deeper into the situation on the EURRUB and USDRUB, we will focus on the instrument, which is more familiar to the majority of traders – USDCHF.

Dollar to Frank made a beautiful Price Action movement – tested broken resistances as a support. That was also expected by us and we warned about this possibility many times in our previous videos and articles. The style of that was brilliant. The price made a fast contact with two supports and then bounced rapidly creating a V shape reversal. Odds for a further rise are currently much higher.

Now Rouble. EURRUB bounced from the crucial long-term horizontal support (orange) and went higher breaking the dynamic (blue) and horizontal (green) resistances. The current target is the yellow area around 74. We should get there pretty soon.

USDRUB is also bullish. Here, the price created the double bottom formation and broke the upper line of the wedge pattern. In addition to this, buyers managed to break the 38,2% Fibonacci. Price closing a day above the orange area will be a nice signal to go long.

This article is written by Tomasz Wisniewski, a senior analyst at Alpari Research & Analysis

Russia – Not the Rating it Needs but the Rating it Deserves

But let us not focus on the glorious admirers of Karl Marx. The very question of Russia’s rating is quite amusing.

Three large agencies, in particular, S&P, Fitch and Moody’s, currently provide an investment rating for Russia. Interestingly, the first two did not even lower Russia’s rating (despite the sanctions). Moody’s, in its turn, lowered it and then returned it to the previous level.

The main intrigue is whether this will have any effect. At this stage, the effect will most likely be a purely speculative one. The truth is that a rating is not valid unless it is awarded by two of three agencies. This means that the decision of Moody’s will not affect the situation with Russian assets. Let us see what will happen next. The picture may change if Russia’s rating continues to grow and at least two of three agencies ‘grant’ Russia one more level.

Does Russia actually deserve its current rating? Russia’s current rating implies that it is in the same line with such ‘locomotives of the global economy’ as Hungary, Morocco and Portugal. The ratings of Poland and Mexico, for example, are only one level higher. Only a little higher are the ratings of China and Ireland.

Does Russia deserve this indicator? The numbers, alas, give a negative answer.

Sovereign Dept as percantage of GDP

Let us analyze the ratio of Russia’s sovereign debt to GDP. In Russia, this ratio is one of the lowest in the world and the lowest among the countries presented in the tables below.

We can also review the ratio of gold reserves to GDP and budget replenishment.

The figures obviously speak of Russia’s underestimation. International reserves as percentage of GDP Credit Rating EM

Now let me summarize. According to real macro-economic indicators, Russia should have at least a BBB+ or A- rating. We can assume that geopolitics and sanctions have directly affected the decisions of the world’s leading credit agencies.

I prefer to keep away from excessive optimism. There are too many problems in the economy. Commodity dependence is still there. The ruble is very volatile. Let alone small and medium businesses that suffocate under the burden of bureaucracy and barely make ends meet instead of pushing the economy forward. Not all of them, of course, but the majority. The Russian economy is in dire need of reforms and the reduction of the state’s role. Anyway, this is a completely different story and I’ll certainly get back to it.

The article was written by Evgeny Kogan, Ph.D., investment banker, the author of the telegram-channel Bitkogan.

Is a Strong Dollar Good for the US Economy?

China, Iran Russia, and Turkey are under Pressure

The threat of sanctions and tariffs from the United States puts pressure on a large part of developing markets. Chinese bourses are under pressure because of the threat of tariff wars. Iran is under threat of imposing sanctions because of the Iranian nuclear programme. Russia is vulnerable because of the suspicion of its interference in the elections. Turkey is under pressure because of the reluctance to release the American pastor. All these threats have already had an extremely negative impact on the business sentiments in the emerging markets, causing capital outflows and national currencies weakening.

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Strong Dollar: Good or Bad?

The big question is whether such strengthening of the US dollar is favorable for the American economy or not. For the long-term distance, the answer is simple – «No».  This is exactly what the President and the U.S. Treasury Secretary have said in the past. Nevertheless, in the short–term the dollar’s growth could help to reduce the US inflationary pressure, avoiding even more abrupt tightening from the Fed. Moreover, it should not be forgotten that the American budget has a huge deficit, and the States actively attract market capital to finance it.

As one of many consequences, the USD receives additional demand due to the flow into the liquid U.S. Treasuries (UST), which is abundantly offered to the markets in order to finance the enormous fiscal deficit.

Coincidence or not, but the effect of the U.S. president’s active economic pressure on other countries is counterbalanced by the effect of the overgrown debt securities offer. As a result of the increased demand for safe-heavens, the yield for 10-years treasuries bond remains close to 3%, reluctant to grow higher, as it was widely expected earlier and despite the Fed Funds rate hikes and acceleration in inflation.

At the same time, strong macroeconomic data of the U.S. economy and company reporting support the positive dynamics of American stock indices. On Monday, S&P 500 added 0.3%, and the index futures add another 0.1% on Tuesday, reducing the gap from January’s historical highs to only 0.9%.

Among individual shares, it is worth noting the growth of Facebook shares. In the recent days, the stocks had stabilized after a collapse and now attract investors who are betting on the rebound after an excessive decline. Taking an important line of 200-day moving average and exiting the oversold zone for RSI also support the bullish sentiment among those investors who look at technical indicators. Twitter shares have not turned to rally yet, but technical indicators demonstrate this possibility.

This article was written by FxPro

Markets Summer Lull Can Be Broken by Major Central Banks, Emerging Markets Currencies Under Pressure

The currencies of developed countries are moving within a narrow range at the beginning of the eventful week. The dollar index is around the mark of 94.50 and has been trading for two months in a range of slightly over 1% around this level. This quiet trading environment can be broken this week after the announcement of the decisions took by the Bank of Japan, the Fed, and the Bank of England, as well as the publication of the U.S. employment data.

Developed markets currencies are experiencing a period of low volatility after the dollar growth period from the end of April to the end of May. The closest market focus is how the Bank of Japan adjusts its policy. More hawkish tone can push down the Asian markets at a time when they are vulnerable amid the fears of trade wars.

With the meetings of the largest central banks and important statistics, the week ahead is able to open a period of increased volatility after a long period of a summer lull. Earlier, the Fed’s head made it clear that the U.S. central bank is set to tighten its policy. Market participants will closely monitor if the Fed is set to raise its rates in September while remaining committed to the 4th increase in 2018.

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The Fed’s hawkish rhetoric can increase the difference in the dynamics of developing countries’ currencies. Unlike the major world currencies, in the EM there has been a noticeable differentiation in recent weeks.

The Russian rubble enjoys the continuation of high oil prices period. The Mexican peso gains after the elections last month and on the expectations of the profitable negotiations on NAFTA.

At the same time, the Chinese yuan has been falling for the recent two months at its highest rate in many years on easing the PBC policy and on fears about the consequences of trade wars with the United States. The Turkish lira declined to all-time lows due to the threat of the U.S. sanctions and after the Turkish CB had kept the rates against a widely expected increase last week, which was perceived as a loss of independence of the local regulator. The Argentine peso is also under attack, despite the assistance from the IMF to the country. The Indian rupee is close to the historical minimum to the dollar, in spite of the strong growth of the economy.

The dividing line for the currencies of developing countries became the balance-of-payments factor. Turkey, India, and Argentina have a significant deficit and are dependent on the inflows of capital from outside. China formally has a surplus, however, the economy of the country’s regions depends on outward investment, requiring favorable investor relations.

This article was written by FxPro

Markets Froze Before Trump-Juncker Meeting on International Trade; RUB, TRY Sharply Fell on Tuesday

The US stock markets were marked by Tuesday’s growth in strong earnings reports, which allowed S&P500 to add 0.3% on Tuesday’s results. On Wednesday, by the beginning of Europe session, the futures for S&P index remains near the closing levels of the previous day. It is also worth mentioning the growth of companies’ shares in the agricultural sector thanks to Trump’s pledges to help farmers in case of a full-scale trade war with the EU and China.

Trade wars will be in the spotlight of markets again. The negotiations between Juncker and Trump focusing on international trade issues will be held on Wednesday.

The EURUSD has traded in a narrow range for the second day in a row, remaining close to 1.17 level in anticipation of important comments in the second half of the week. In addition to the meeting of Trump and Juncker, it is also worth highlighting tomorrow’s meeting, where the markets will try to grasp how seriously the central bank estimates the economic damage from already introduced measures and uncertainty around the future tariff policy.

Among the currencies of emerging markets is to highlight yesterday’s weakening of the Russian rouble and the Turkish lira, despite the overall increase in demand for risks. TRY lost more than 4% and returned to the area of historical lows to the dollar after Central Bank of the Republic of Turkey had kept the policy rate at 17.75%. The markets considered this as a strengthening of Erdogan’s power, as he earlier had expressed publicly his preference for a less stringent policy despite inflation.

The Russian rouble lost almost 1.5% last night after Trump’s tweet stating that Russia “will be pushing very hard for the Democrats” in the upcoming elections. These words were perceived by the market as Trump’s willingness to support new sanctions against Russia. Up to these words, the Russian market almost ignored the reports of a new U.S. Senate sanctions package.

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Nor can it be ruled out that the current negotiations may also be of a positive nature. It is very likely that the stakes are high enough and the time has come to negotiate. Yet the main expectations of bidders are that the world’s largest economies can avoid full-fledged trade wars and protectionism.

Significant macroeconomic releases include the publication of sales statistics for new homes in the United States, as well as the reporting of such companies as Facebook and Visa.

This article was written by FxPro

Russian Hackers Invaded Control Rooms of U.S. Power Companies, President Trump Warns Iran

The Wall Street Journal reported on Monday that hackers from a Russian state-sponsored group invaded the control rooms of U.S. power companies. There were two attacks by the Russian group: the first attack was back in the 2016 and the second attack throughout 2017.

The Russian hackers broke the security networks of American important power companies last year and possibly caused some blackouts.

It most probably carried out by hackers that are specialist and worked for a Russian stated sponsored group known as Dragonfly or Energetic bears, according to Wall Street Journal.

The hackers probably manage to enter the company’s facilities by acquiring fake identities of actual employees.

Russia has denied any involvement in hacking the US infrastructure.

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On other news, President Donald Trump warned his Iranian counterpart in a Twitter post to ‘NEVER, EVER THREATEN THE UNITED STATES AGAIN’ which creates more tension between the two countries.

The tension between the US and Iran has increased since President Donald Trump withdrawn the US from the Iran nuclear deal.


On Sunday, the Iranian President Hassan Rouhani warned the American President to not pursuing hostile policies by saying “War with Iran is the mother of all wars.”

The Iranian leader also said, “You are not in a position to incite the Iranian nation against Iran’s security and interests”.

On Monday morning, Trump’s security advisor who is well known about his hawkish bias backed the presidents warnings by saying in a statement “I spoke to the President over the last several days, and President Trump told me that if Iran does anything at all to the negative, they will pay a price like few countries have ever paid before.”

This article was written by Marios Athinodorou, TeleTrade’s market analyst, and commentator. Among others, Marios is delivering weekly trading webinars. Sign up for upcoming webinars here.

The Trump – Putin Helsinki Show

While Trump was credited to the ‘Art of the Deal’ along with journalist Tony Schwartz, references to which have left the global financial markets in sometimes bewilderment, some of the negotiation tactics seem to be more akin to Sun Tzu’s The Art of War than the Art of the Deal. The U.S President appearing to have finally decided that The Art of War may ultimately be a better reference point as he goes about his business alienating allies while embracing the enemy.

“If you know your enemies and know yourself, you will not be imperilled in a hundred battles; If you do not know your enemies nor yourself, you will be imperilled in every single battle,” is perhaps one of the more famous quotes, though Trump may have taken this from the Godfather Part II, where Michael Corleone said “My father taught me many things here – he taught me in this room. He taught me – keep your friends close but your enemies closer.”

So, with the Helsinki mission complete, there has been plenty of noise since and, while Trump may look to refer to Sun Tzu or heaven forbid, Michael Corleone, the rest of the U.S administration, the Senate and U.S allies may have an altogether different take on Monday’s events.

It didn’t take long for House Speaker Paul Ryan to give his views, stating that the U.S must be focused on holding Russia accountable and putting an end to its vile attacks on democracy, adding that the President must appreciate that Russia is not an ally and remains hostile to the most basic values and ideals of the U.S.

From the press conference, there were a number of key takeaways that included:

  • A common intent by both to improve Russia – U.S relations and develop a reasonable degree of trust.
  • Trump failed to vilify Putin for Russia’s meddling in the 2016 presidential election, with both Trump and Putin agreeing that there had been no collusion in the election.
  • The Russian President said that a working group of U.S and Russian businessmen will be put together.
  • On Syria, there was clearly some discussion as had been anticipated, though no details were shared, Trump merely stating that the two nations could save hundreds of thousands of lives in the country, while Putin aired his concerns over the number of refugees that had been displaced.

Clearly, the failure to address Russia’s meddling in the presidential election was the most troublesome, particularly when the investigative team, led by Robert Mueller, has just indicted 12 Russians on evidence of election meddling. Putin was kind enough to offer the investigating team with access to Moscow to clear any wrongdoing, though we can expect this to be staged if Mueller even decides to follow Trump down a very slippery slope.

On Syria, one shudders to think what had been discussed, particularly when considering Trump’s single desire to bring down the Iranian regime and at any cost. Time will tell, but if there is anyone more versed in the Art of War, it is probably the former KGB agent than U.S property mogul turned leader of the free world.

So all in all, while the U.S President alienates the EU and China and NATO members, he has to date, befriended Vladimir Putin and Kim Jong-un, both of whom have, by various preceding Presidents of the United States, been referred to as public enemy number 1.

The Dollar retreat reflected the market’s view on the press conference and NATO members and the EU may well be wondering what’s next, perhaps Sun Tzu’s quotes need to be heeded by both and anyone else who has been on the receiving end of Trump’s Art of the Deal. As for China, well no doubt Chinese Premier Li is aware of ancient Chinese military strategist Sun Tzu and his works.

Trump: Summit with Putin Off to “Very Good Start for Everybody”

U.S. President Donald Trump and Russian President Vladimir Putin met for two hours earlier today. The summit, which began after nearly an hourlong delay, lasted more than two hours, longer than the 90 minutes that had originally been planned.

Most of the talking before and after the meeting was done by President Trump. Before the start of the summit, Trump predicted that he and Putin would have an “extraordinary relationship” and that he is looking forward to their discussion. After emerging from the meeting, Trump said the talk was a “very good start for everybody.”

Trump’s agenda included having discussions “… on everything from trade, to the military, to missiles, to nuclear, to China.”

Trump also thought it would be important to improve the relationship between Washington and Moscow, adding, “I think we have great opportunities together as two countries that frankly have not been getting along very well for the last number of years.” Additionally, “I really think the world wants to see us get along.”

Another topic open for discussion was the reduction of nuclear weapons.

Trump did not mention if he and Putin will discuss the crisis in war-torn Syria, denuclearization of the Korean Peninsula, or the ongoing investigation of Russia’s attempts to influence the 2016 U.S. presidential campaign.

On the other side, the Kremlin played down expectations from the summit but said the meeting would be a “first step” in resolving a crisis in ties.

U.S. Economic Data

U.S. retail sales posted a firm gain in June, helped by increases in purchases of motor vehicles and a range of other goods, solidifying expectations for robust economic growth in the second quarter.

According to the U.S. Commerce Department, retail sales increased 0.5 percent last month. Additionally, data for May was revised higher to show sales rising 1.3 percent instead of the previously reported 0.8 percent gain. May’s rise in retail sales was the largest since September 2017. Traders were looking for a 0.5 percent increase so the report is being called “better-than-expected”.

Core retail sales came in as forecast at 0.4%. However, the previous report was revised to 1.4% from 0.9%.

In other news, the Empire State manufacturing index fell 2.4 points in July to a reading of 22.6, according to the New York Fed. The previous report was 25.0. Despite the decline, the reading was still better than the 20.3 estimate. Traders showed no response to the report.

Business Inventories were 0.4 % as expected, up slightly from the previously reported 0.3%.

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Breaking News

U.S. West Texas Intermediate crude oil futures plunged below $69, dropping a whopping 3 percent after Treasury Secretary Steven Mnuchin said some oil buyers could get waivers to continue buying Iranian supplies despite American sanctions on the Middle Eastern country.

“We want people to reduce oil purchases to zero, but in certain cases, if people can’t do that overnight, we’ll consider exceptions,” Mnuchin told reports on Friday while traveling to Mexico, Reuters reported. The comments were under embargo until Monday morning.

How Are US Sanctions Affecting Global Markets?

With tensions continually rising over Syria, it looks as though there may well be further developments between all countries involved in the coming months. Any US sanctions could well have significant consequences for global markets and investors. Here are some of the effects they may have.

Iranian Oil

Iran is one of the main oil producers in the world, and the Iranian oil industry forms a significant part of its overall economy. Oil prices have already been rising as a result of the threat of US sanctions against Iran, with many investors clearly banking on more sanctions being imposed.

If oil prices do continue to rise, then OPEC pacts may well ease off as oil-producing countries take advantage of the higher prices. This, however, could serve to worsen the current oversupply which has been keeping prices down for the last few years.


Some of the US’ most heated exchanges have been with Russia, who it criticises for supporting the Syrian government. Sanctions imposed earlier this month against Russia have already instigated volatility in Russian markets, and this could continue for some time if political relations continue to be turbulent.

The rouble continues to decline versus the US dollar, suggesting that further sanctions could have an enduring effect on the Russian economy. Oil is also one of Russia’s major exports, so sanctions could also harm the Russian oil industry in the same way they may harm Iran’s.

Investor Sentiment

Those using online brokers like Oanda to invest in their chosen markets will no doubt be apprehensive given the current situation, as volatility pervades the economies involved. It is difficult to accurately predict how far the US will go with its sanctions, but they certainly seem to be having the desired effect.

Some investors may well try to take advantage of the current volatility by stocking up on assets which may shoot up in value as a result of sanctions (e.g. oil, aluminum, gold). Investor behavior will likely be based on whether political solutions to the current global problems can be found, or whether relations will continue to worsen between the US, Iran, and Russia.

Nuclear Deal

The Nuclear Deal between major world powers and Iran, which has given the latter sanctions relief in return for it curbing the nuclear program, is now under threat. If relations continue to worsen, it is fair to say that any renewal of this deal will be in serious danger.

This could cause further investment caution with regards to Iranian assets, depending on which companies would be targeted by sanctions. It could also serve to damage the value of Iranian stocks if investors are significantly dissuaded from investing in them.

Ultimately, US sanctions are having a profound effect on global markets, and this could continue for the foreseeable future. The threat of further sanctions, as well as the deterioration of relations between the US and Russia/Iran is likely to be influencing investor behaviour, and it could be the case that divides continue to widen.

Despite this, some Russian oil companies have actually been performing fairly strongly as sanctions have raised the price of oil. This may raise the question of how effective sanctions are in achieving their purpose, and whether dialogue may be a better solution to the current conflicts.

This article was written by Vanessa Bastos

Global Stocks Stable but Caution Dominates as Traders Eye U.S-Russia

Forex has been stable. But commodities have reacted to the saber-rattling between the U.S and Russia which has occurred the past twelve hours as the Syrian conflict escalates.

Russian & U.S Rattle Swords, Markets Remain Calm but Cautious

Geopolitical tensions in the Middle East have risen in the past twelve hours, as the White House has stepped up its threats to act in response to what it views as overly aggressive actions by government forces in Syria. Russia has responded by saying it will react. Global equity markets have become cautious, but the greatest impact appears to be in commodities. Cooler heads will certainly not want to see the crisis escalate, because the number of potential ramifications would be enormous. Selling on the Asian exchanges has been calm and European Indexes appear to be tame. But traders need to stay alert today. Inflation data from the U.S was rather tame yesterday and the broad Consumer Price Index figures came in below expectations.

Euro & Pound Sustain Values, Fed’s FOMC Report Hawkish Yesterday

Forex has been consolidated the past twelve hours as investors have held onto their positions. The Euro and Pound have maintained their gains made on Tuesday, but have not shown much impetus to advance against the U.S Dollar. The Federal Reserve’s Monetary Policy Meeting Minutes report yesterday showed the Fed is ready to be more aggressive regarding interest rates if U.S economic growth remains strong. The European Central Bank will issue their monthly report today which reviews last month’s policy decisions.

Tactics will be Important, Commodities Sparked by Risk Adverse Trading

U.S Crude Oil and Gold have gained well this week. Risk adverse trading in both commodities is sparking buying momentum even as key resistance levels are tested. Traders should be careful in the current trading environment, and it may be beneficial to use pre-set ‘take profit’ and ‘stop-loss’ order tactics.

European Central Bank Report Today, Weekly Jobs Numbers from States

Forex traders will be interested in the ECB’s Monetary Policy Meeting Accounts publication at 11:30 GMT.

  • 11:30 AM GMT, E.U, ECB Monetary Policy Meeting Accounts
  • 12:30 PM GMT, U.S, Unemployment Claims

Yaron Mazor is a senior analyst at SuperTraderTV.

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