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Trump Resets US Relations With The Region

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For the past few days, Donald Trump made history once again, as he signed the single largest arms deal in the US history. Such deal comes amid global geopolitical uncertainty whether in the region or abroad, including the tensions with North Korea.

However, Trump’s decisions and the deals that were signed in Saudi Arabia showed a clear sign of the US commitment toward the region, aiming to bring stability to the region once again.

Many cases were discussed including Iran, Syria, Yemen and terrorism. The discussion itself was a positive sign for the regional equities as well, including TASI Index which added nearly 1% of gains on Sunday.

Yet, such deals and the first visit of Trump to Saudi Arabia was not welcomed by Iran, especially after the Trump’s administration decision to renew sanctions on some Iranian officials and companies.

What Does The Visit Mean For The Region

From my point of view, this visit is just like a routine that all of the US presidents have done once they got elected. Saudi Arabia plays a major role in the region and in Oil Prices as well.

However, does this deal means that the relationship would improve? We hope so. Yet, this was also the case when Obama visited Saudi Arabia during his term. Everyone is looking for stability and security, but things are not going the right way so far. However, the market has some sense that Trump might bring the change.

After the positive outcomes of Saudi Arabia visit, he left to Palestine/Israel where everyone in the region will be following his remarks very carefully.

So far, the visit means that the US is willing to change and push for peace in the region, but the question remains if Trump’s administration will be able to achieve such a complicated goal.

USD Failed To Rally

Despite the positive outcome of the visit to Saudi Arabia, the US Dollar had a slight uptick earlier this morning, but failed to sustain these gains, and declined all the way back to 97.0 barrier.

One of the reasons for such decline are the continuous political complications in the US, which remain unclear.

As long as there are no clear answers regarding the former FBI chief’s memo. The uncertainty is likely to expand even more. Meaning, any rally in the US Dollar is likely to be limited.

From a technical analysis point of view, the US Dollar Index first immediate support stands at 96.60’s which likely to hold as the technical indicators are oversold, which support a possible bounce before the downside trend resumes.

US Equities May Rally Today

The US equities futures are slightly higher since the beginning of the day. However, Europe is unable to go green. Most of the indices are back in the red area.

However, the US arms deal with Saudi Arabia could be an opportunity to trade US stocks later today. The main sector to focus on today is the Aerospace and Defense sector.

One of the stocks that might be the biggest winner today is $NPK (National Presto Industries), which closed at $104.0  on Friday.

Another stock to look at is AeroVironment Inc. which closed at $30.85 on Friday, but it’s up by more than 20% since the beginning of the year.

Those two stocks might be the star of the next US session ahead. Moreover, the political situation in the US is likely to cool down at least until the testimony of the former FBI chief, which may help the US equities to recover some of last week’s declines.


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