The risk-on and risk-off barometer remains the USD and given that the U.S. Dollar Index (DXY) is up on the day and equity markets are mixed – it’s all about the U.S. data and further political stories ahead.

The downtrend in Australian dollar (AUD) since January has helped steady the economy against geopolitical headwinds from the U.S. and China but the politics opens another 0.72 test again.

Many think the risk of Trump impeachment rose so risk should logically be lower but for the fact that its August and the real event will be if Republicans lose control of Congress in the November mid-terms.

Today, markets are steeled for more political headlines but they aren’t just about Trump. The Australian leadership challenge grabbed early headlines overnight.

The Senate there voted down a no-confidence motion but FinMin Bishop is the now running for Liberal Party leader against Turnbull.

The UK grabs some headlines as the government releases its “no-deal” Brexit contingency plans, but Raab remains upbeat.

Of course, pain trade in EM today is Trump-related with South African rand (ZAR) off 1% on tweet that the U.S. will look into recent farm seizures, raising the risk that South Africa could be the next victim of sanctions/tariffs. Land reform in South Africa remains unfinished and complicated business.

The economic data today was the mainstay for the week and it's mixed as well with Japan better, Europe overall better even as manufacturing stutters in Germany, it gains in France, and though overall export orders have the smallest rise in 2-years, Services counterbalance. Confidence is waning there and it’s clear that Trump trade issues matter.

The U.S./China talks are not expected to stop the start of $16 billion in tariffs today but many still see NAFTA and a U.S./China deal into the mid-terms. This macro hope matters to how to play the rest of the day and week as there is clearly fear about the Trump/Fed relationship and the role of the USD in the entire mess.

View TrackResearch.com, the global marketplace for stock, commodity and macro ideas here