The political circus that Washington has become continues to draw investors’ attention away from fundamentals. Just when the smoke cleared from Attorney General Sessions testimony, news broke that nearly 200 Democrat congressmen had filed a lawsuit against the Trump administration for alleged improper business interests. Political uncertainty and disappointment in Trump's failing pro-growth agenda will continue to weigh on USD sentiment. However, steady economic developments including China's solid data released today suggest a positive backdrop for risk-taking and potential for an overly bearish USD market to reverse.
In China, economic data indicated that despite decelerating pace of fixed asset and real estate investment (positively slowing rate of financial leverage buildup), industrial production and retail sales were strong. In our view the balanced results indicate higher level of economic stability in China than the market recognises. We remain constructive on China growth outlook and would materialise our view via long China technology stocks.
By Peter Rosenstreich