This week, the focus among investors and traders was on Donald Trump. This week, he travelled to Belgium for the annual gathering of NATO leaders. As expected, the president was the main headliner for the event that happens every year. Even before he touched down, he had already showed signs that he was not pleased with the organization. He sent a few tweets, questioning its importance.
On arrival, the president unloaded on the Secretary General of NATO on Germany. He blamed Germany for being a free rider in NATO because of its low spending and its close association with Russia. Germany is the wealthiest country in European Union and the second wealthiest in NATO after the United States. Yet, the country has failed to meet its commitment on boosting defence spending. The country is also building a major pipeline that will supply natural gas from Russia. In addition, Donald Trump is not the first American president to condemn NATO, and Germany in particular.
After his trip to Belgium, the president went to the UK, where he was met with large protests. Still, he continued to make news, particularly on Brexit. In an interview with The Sun, the president expressed his disappointment with the ongoing pace of Brexit. He said that he had talked to Theresa May on the best way to approach Brexit by getting out completely from the EU. However, Theresa May took the opposite direction and crafted a deal that would see the EU retain some control with the EU. In the interview, Donald Trump said that it will be difficult for the UK to do a trade deal with the US.
Another big news this week was still from the United States which unveiled $200 billion worth of Chinese tariffs. This was an expected move after China retaliated against the US tariffs. This news meant that the escalation between the two biggest economies in the world will continue. China has vowed to retaliate against the new US tariffs. Experts believe the country could use non-tariff methods to tariffs such as devaluing its currency, slowing the purchase of US debt, and restricting US companies in the country. As a result of the tariffs, the global stocks fell but had a recovery on Thursday after some reassurances from the US.
Crude oil had an interesting week, with major swings as shown below. On Wednesday, WTI crude fell by more than 5%, which was the largest decline in more than one year. The decline came after Libyan rebels returned a major oil field to the UN-recognized government. The rebels had control of the field for years. This was an indication that the shortage from Iran and Venezuela will find a replacement by the Libyan oil.
The only central bank that met this week was the Canadian one. As expected, the bank lifted interest rates by 25 basis points but sounded caution on further rate hikes. This led the Canadian dollar to jump against the US dollar. However, the hopes for rate hikes were diminished after traders took time to read the accompanying statement. The statement raised concerns of the ongoing trade conflict between the US and Canada and lowered expectations of further hikes.
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