1. Here’s How Markets Reacted to Trump Firing Bolton
In the US, President Trump fired John Bolton, a known ideological hard-liner heavily against China and Iran, which instantly changed the tone between the US and China. Based on what Hu Xijin knows, China is going ahead with important measures that will ease the negative impact of the trade war. It looks like Trump has shifted his strategy from “tough” to “get elected again” and for that, he needs to avert a recession at all costs. Risk markets globally turned positive on the news of Trump firing Bolton. However, this change may well be short-lived as it is based on the presumption that a solution can be reached between China and the US.
2. Forex Preview: Safe Haven Currencies Edge Lower
The Japanese yen fell on Wednesday as the rush into safe-haven assets during the summer continued to unwind on the back of rising risk appetite, while the euro paused before Thursday’s European Central Bank meeting. It appears the repricing in bonds and yields hint that traders are questioning the expectation of an extremely dovish stance by the ECB tomorrow, which could help the EUR further up. The USD also traded mostly flat and this shift in sentiment definitely eases the pressure of dovish expectations on any central bank.
3. Oil Prices Hit by Bolton Incident by Later Recover
Yesterday, President Trump abruptly fired John Bolton, his national security adviser, with whom he had fundamental disagreements over Iran, North Korea and Afghanistan. Trump’s decision sent oil prices temporarily lower as markets questioned whether diplomatic agreements with Saudi nations can be maintained. Oil prices later traded higher after an industry report said U.S. crude stockpiles fell last week by more than twice the amount that analysts in a Reuters poll had forecast.
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*Financial Times Sept 11, 2019 03:07 AM ET
**Reuters Sept 11, 2019 3:53 AM ET
***CNBC Sept 11, 2019 2:48 AM ET