Trump’s speech drives dollar rebound
(Arnaud Masset, market analyst)
The greenback extended gains across the board amid Donald Trump's use of a more pacifying tone during his address before Congress. The dollar index surged 0.60% during the Asian session as it tested 101.73, but was unable to break the resistance implied by the high from February 15th. Equity markets also welcomed Trump’s speech as Asian regional exchanges were trading in positive with the Nikkei rising 1.44%. In Hong Kong the Hang Seng was up 0.21%, while in mainland China the Shanghai Composite was up 0.16%. US futures also climbed higher as the S&P futures rose 0.33%, while the ones on the Nasdaq were up 0.31%.
Despite the market’s positive response, investors remain sceptical that Trump will in fact deliver what he has promised. Indeed, zero progress has been made with the president continuing to avoid providing any insight regarding his tax cut plan. Instead he simply reiterated his pledge to spend “big” on infrastructure. At this point Trump is simply buying time as he slowing understands that there is a whole world of difference between talking and taking action. For now, it seems as though investors are satisfied with his call to end “trivial fights” - but for how long?
South Korea’s exports jump to 5-year high
(Arnaud Masset, market analyst)
Exports surged 20.2%y/y in February, the fastest pace since February 2012, amid strong demand from its main trading partners, namely China (+28.7%y/y). Exports to the US, the country’s second largest trade partner were up 1.7%y/y after shrinking for two consecutive months. This is definitely good news for export-oriented countries such as South Korea as it tends to confirm that global demand is finally picking up after a rough couple of years. The won did not react much overnight - mostly due to the fact that South Korea is celebrating its Independence Movement Day and financial markets are closed - but also as the news was already widely anticipated by market participants after a clear hint last week from the finance minister. USD/KRW rose more than 1% to 1,144 as investors remained exclusively focused on Trump’s Congress address.