High Frequency Trade War: Extreme Care Exercise

The last 12 hours have seen more swings and turnarounds than in the last 12 hours and much more needs to be done. While the markets licked their wounds after Wednesday's slump (falling 800 points), a new wave of sales appeared late Thursday morning in London after China declared that Trump's tariff delay was not enough to stop the reprisals – without specifying how she would react. Two hours later, the markets erased all the losses of the morning. The JPY has largely lost thanks to reports that Beijing was ready to meet the United States halfway through the negotiations. Markets continued to rise after the largest US gain in 4 months in the US and stronger than expected. US has contracted unexpectedly. We closed the short-term gain of 700 points of the Premium DOW30 before opening a new trade (non-indexed non-FX). There are 2 existing trades currently open. Separately, sold after ECB remarks.

All this is a recent reminder of why traders should stay relatively small in their positions and be extremely cautious when they leave their positions overnight.

Wednesday's violent sell-off was only about cash returns – a classic recessionary signal with an astonishing record of contraction forecasts over the next two years. This was triggered Wednesday in the United States, the United Kingdom as well as in Canada while a massive offer has seized economic fears. The 30-year US yield fell 15 basis points below 2.0% for the first time in the registers.

This led to a 2 to 3% decline in North American and European equities. The damage was not as dramatic in FX as it sank 80 pips and did not fill the gap of the day before. The commodity currencies were hit a little stronger but not enough to break the margins for the year. It may be only a matter of time. At decisive moments in the economy, sentiment can be as important as reliable data. Relentless trade war headlines will surely reduce business investment and consumers may soon withdraw.

The euro falls on Rehn

Olli Rehn, a member of the ECB's Governing Council, told the WSJ: "It is important that we develop a meaningful and meaningful policy package in September". The comments recall the ECB's counterweight to easing on the part of the Fed.

Meanwhile, President Trump has begun to criticize the Federal Reserve relentlessly. He attacked Powell four times on Wednesday and his deputies did the same. The Washington Post said it was part of a strategy to support the economy by lowering rates. We see more of it as a sign that the president can not stand a deep fall of actions.