A Quiet Beginning Doesn’t Stay That Way

Bill is the President and Co-founder of Profits Run, Inc. The company gives traders the tools to manage their wealth making investments while minimizing risks. Bill Poulos reviews topics on finance and trading the markets in easy to understand terminology on the Profits Run YouTube channel.

This past week started off quiet enough with a Monday Holiday in both the US and the UK but things did begin to heat up as the week progressed. The US China trade war is in full swing with reports coming out that China may look to limit their export of rare earth metals to the US if the trade war persists. Rare earth metals don’t necessarily have a lot of value from a financial standpoint and there isn’t a lot of them that are imported by the US, but they are crucial for American technology companies that are highly innovative and pushing current technology into the future. US companies don’t produce rare earth metals, so they are reliant on China to export the material to produce products such as mobile phones, magnets, night vision glasses, gyroscopes in jets, LED lights, glass, and ceramics. China indicated that it is aware that it could use rare earth metals as a hammer against the US and may do so if the trade war tension increases. These events have dampened the markets in general with the US stock market pulling back for most of the week. The USD gained strength against the EUR, GBP, and CAD while staying flat early against the AUD and JPY. The good news may be that there has been allot of speculation that the leaders of the two countries would meet next month at the G20 summit and it appears as though it will happen.

A new trade war may be on the horizon. Overnight into Friday the US has announced tariffs on imported goods from Mexico that will go into effect on June 10th due to the illegal immigration problems at the US/Mexico border. The US President states that Mexico isn’t doing enough to stem the tide of illegals crossing into the US from Mexico and the tariffs will increase monthly until the situation is resolved or at least until it is managed. This roiled the US futures market overnight into Friday morning trading. On Friday, the USD was rocked by the JPY and it gave back nearly half of what gained throughout the week to the EUR. It remained relatively stable against the AUD, CAD and NZD while continuing to take advantage of the GBP.

The UK clearly has its own set of issues to deal with. Since the announced resignation of the Prime Minister the Brexit situation has not improved and now potential successors are coming out, all of this just adds to an already chaotic situation. As mentioned the GBP lost a good amount to the USD this week and it also lost substantially to the JPY and AUD while holding up well against the CAD and NZD. EUR/GBP gapped down hard on the open at the beginning of the week but it quickly recovered eventually flattening out until EUR filled the gap and took more than what it lost early in the week.

The EUR had a pretty good week overall with the aforementioned recovery against the GBP, taking back at least half of what it lost early form both the USD and CAD. It was about flat with the NZD, the AUD took advantage over it and the JPY really made it pay.

JPY may have been the star this week taking advantage of all of its major trading partners with the exception of the AUD, it stayed relatively flat against the AUD while pummeling just about every other currency.