Johnson's insidious plan, US GDP and dollar’s reaction

29 Ağu 2019

Boris Johnson asks Queen to suspend parliament.

The decision will cut dramatically the time MPs will have to take action to prevent no-deal Brexit. he is going to ask the Queen to suspend parliament for five weeks from mid-September.

It seems like the Queen is ready to be in. And this means that the opposition will have time until September 12 to prevent the "no-deal" Brexit. The value of the pound has fallen by 1% following news that Prime Minister Boris Johnson is planning to suspend parliament

The signal is more than alarming. Chances of the "no-deal" Brexit have increased dramatically. And this means that you need to be careful. Now we consider such pound descents of 150 points as an opportunity for cheaper purchases. But with stops. Once again, we note that events are developing against the pound, for now.

Data on US GDP for the second quarter will be the main event. Experts expect a slight downward revision. The GDP growth rate is expected to remain at 2 %. Our expectations are more pessimistic. The fact is that the global economy as a whole and individual countries are increasingly showing signs of a slowdown. Very indicative is the data on German GDP, which, recall, showed a decrease in the second quarter. And most importantly, the decrease was due to the slow negative dynamics of exports. That is the direct evidence of the destructiveness of a trade war. There are reasons to expect further deterioration of the situation.

Thus, we will not be surprised if the data is reviewed for the worse, but not by 0.1%, but more for example 1.5%. That will shock markets and the dollar will inevitably suffer. Moreover, the dollar will be under double pressure: the reaction to weak economic data will be multiplied by the growth of confidence in the Fed rate cut in September. So today we will sell the dollar across almost the entire spectrum of the foreign exchange market.