Analysts, Andreas Steno Larsen and Martin Enlund, at Nordea Research explained that Trump has arrived in Singapore ahead of his meeting with Kim Jong-un fresh of turning his back on the G7 communiqué.
Key Quotes:
“Trade risks are on the rise again.”
“We have argued over the past 2-3 weeks that both Trump and trade risks are on the rise again, as the market will perceive Trump’s loudmouthed negotiation tactic as a risk factor.”
“The G-7 summit didn’t disappoint on that front, as Trump has turned his back at the common communiqué in the wake of the meeting. It is still our impression that Trumps ultimate goal is to force trading partners to lower tariffs on US goods and services, but as long as that doesn’t materialize, then Trump will not be shy of threatening with fire and fury.”
“Next up on Trumps agenda could be auto-tariffs. A threat of auto-tariffs should lead to a weakening risk appetite, as those will likely hit broader and harder than any of the so far suggested tariffs. And they could also prove USD negative initially.”
“Also the North Korean summit is a risk factor to consider for this week. If Trump opts for the same kind of negotiation approach towards King Jong-un as the one he opted for over the weekend at the G-7 summit, the USD could face the fire and fury of markets short-term.”
“Ultimately we see any USD weakness on the heels of Trump outspokenness this week as a chance to rebuy the USD, as Trumps rhetoric should be seen as negotiation tactics and not necessarily as actual threats.”
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