President-Elect Trump posted a strong warning to the BRICS nations over the weekend against pursuing an alternative currency of reserve to the US Dollar.

1. While President-Elect Trump seems to have learned to moderate his language a bit since his first term of office, he was back in characteristic form over the weekend, when he posted a threat to the BRICS nations (Brazil, Russia, India, China, South Africa) against their publicly mooted plan to create a new global reserve currency which could challenge the US Dollar status as the world’s top reserve currency. President Trump has other reasons to be displeased with some of these countries – during the Biden administration, Brazil and South Africa took an almost hostile stance towards the USA, although Brazil has been working hard to change its tone since Trump won the Presidential election. China and Russia and of course long-term adversaries of the USA, but India is in a more friendly category and is a country President Trump will want good relations with. Trump’s threat was to impose a 100% tariff on imports from any offending BRICS country, which is a strong economic threat. The Chinese Yuan has traded at a 4-month low, partly due to this threat, and partly due to below par PMI data.
2. Since this week opened in Tokyo some hours ago, the Japanese Yen has fallen quite firmly after its strong advance last week, which is a natural market reaction. In my weekly Forex forecast yesterday, I wrote about going long of the AUD/JPY and CAD/JPY currency crosses, both of which have risen strongly so far today.
3. The Euro has been weak since this week began due to deadlock on the French budget, which is threatening to cause the government to fall which has only recently been elected. This increases the sense of political deadlock in France and the decay of the fifth republic. This has sent the EUR/USD currency pair into a bearish cycle again. It is already established within a long-term bearish trend.
4. In the Forex market, the US Dollar has been the strongest major currency since the Tokyo open, while the Euro has been the weakest. Trump’s BRICS threat mentioned above has probably had the effect of boosting the greenback.
5. The cryptocurrency Bitcoin continues to consolidate below $100,000 but the price action has started to look more bearish, suggesting a short-term fall is about to happen.
6. There will be a release today of US ISM Manufacturing PMI data.

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