Global markets continue to enjoy an overall boost in bullish sentiment as the final trading month of the year approaches. Trade negotiations between the US and China are in focus and the majority of market participants trade as markets as if the phase one trade deal is the solution to all global issues. This bullish confidence may be misplaced as other structural economic issues remain ignored.

With traders focused on discussion between the US and China in order to resolve the trade war which the US initiated, many tend to forget and ignore the third player on the scene, the EU, and its own trade practices. While efforts are being made to find a solution which will work for the US and China, the EU is creating its own trade problems with both sides.

Germany is the export powerhouse of the European Union, the largest economy on the continent and the driving force behind EU surpluses as well as fiscal and political policies. Chancellor Merkel is approaching the end of her political career and her as well as her party, the CDU, have already suffered losses in regional elections. Her own election victory marked the worst showing for her party since World War II. With a slowing global economy and a leadership change during the next German elections, Merkel’s team as well as other officials are undecided on how to proceed.

The US Dollar has contracted against every other currency in the G-10 basket since the inauguration of President Trump last year in January. US Treasury Secretary Mnuchin arrived at the World Economic Forum in Davos yesterday in order to prepare the attendees for President Trump’s ‘America First’ policy on a global stage.