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Politics dominating fundamentals

16/07/2018

Now that the hugely successful FIFA World Cup 2018 is over, traders and investors can go back to looking at the market. In Europe, politics is the main driving force in the market, putting economic fundamentals on the back seat. After President Trump’s visit to the UK, he now moves on to the summit with Vladimir Putin. Trump has indulged in a little hyperbole, stating that the US-Soviet relationship has ‘never been worse’, (which is a bit of a stretch for those that remember the Cuban Missile Crisis), but there is no doubt that the US Democratic Party, with it’s constant smearing of the US President has certainly muddied the waters. Part of Trumps voter appeal is his tendency to stray from the script, but this is very unsettling for investors, and it seems we are never more than a sentence or two away from an unguarded comment that will delight his supporters and infuriate his opponents.  The truth is, US/Russian co-operation would be highly inconvenient for those that feed off the corpses that political instability creates. However, such co-operation is likely to be difficult to achieve given the amount of attention paid to the whole fabricated Trump/Russia collusion straws that the US left cling to with such fervour. Safety will be at the front of the mind of many investors and with Swiss Francs (USDCHF) breaking slightly above par, it is likely sellers of the US currency will appear. Gold (XAUUSD) is also finding buyers as nerves start to fray. Bitcoin (BTCUSD) has lost all credibility as the safe-haven option at this point.

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