US stocks were again hit hard yesterday, when Wall Street experienced the worst day in the past 8 months amid political turmoil in the United States. We are seeing the so-called Trump deal, in which the shares and the US dollar were raised for months on Trump’s promise to be good for business, and also promised to take a less rigid stance towards banks. The bullish slump has disappeared, and we are seeing profit taking on recent moves that have shown record highs. The reason for doubt is the recent accusation and subsequently the creation of an independent supervisory board to examine allegations that Trump and / or the Trump administration have colluded with Russia in rigging elections in the United States. Former FBI director Robert Mueller was named special prosecutor of the Russian court, and the market expects that tax and other reforms will give way, as the White House is coping with it. Shares will remain under pressure, as traders are cautious, quickly drop stocks if political instability worsens.
The dollar also became a hit, and now futures rate only a 65% chance of a rate hike in June, up from 87% last week, as the price of traders in the new uncertainty, determining the USD index, the strength of the USD against the basket of currencies, is below 98. JPY was a big gain because of its safe harbor properties, getting an impressive 250 points against the USD in yesterday’s trade. EUR was just behind, as we saw that EURUSD added 250 points this week. As long as instability continues, the dollar will remain subdued. On the bright side, we have several fundamental releases expected today that can turn the fate of the currency, if better than expected.
In raw material terms, the price of crude oil remained below $ 49, as all views turn to the OPEC meeting next week and are looking for any oil production from the producing countries regarding production, as well as the impact of US political problems and their impact on demand for oil.
Gold flourished amid uncertainty, when buyers who performed short work at 1250 experienced a maximum until 1262, until profits saw the retreat of precious metals. Bulls will try to keep above the 1250 mark when they expect a repeat of 1275 onwards, if we see further political instability or a depreciation of the dollar.