Turmoil at the White House raises the risks of more interventionist trade and foreign policy. The euro was the top performer Tuesday while the Canadian dollar lagged. The BOJ minutes, the RBA’s Kent and Japanese machine orders are up next; along with a US special election. Below is the Premium video, highlighting 11 existing trades ahead of US retail sales.

The departures of Secretary of State Rex Tillerson and two low level officials shook up the White House ranks on Tuesday. Tillerson had long been rumored to be leaving but Trump made it official with a tweet and appointed CIA head Mike Pompeo to the position at the same time.

Separate rumors were that national security advisor H.R. McMaster will be next to go be replaced by John Bolton. While the departures aren’t a shock, the replacements are major hawks, especially on Iran and North Korea.

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On the trade front, a report said Trump was preparing a series of China-directed tariffs to be released in the coming weeks. The news overshadowed the CPI report, which was in-line with estimates but contained a number of soft details that suggest a deceleration in the months ahead.

The S&P 500 had been as high as 2801 but skidded to 2765 at the close. Along with that, USD/JPY fell to 106.56 from 107.25 and the US dollar was broadly weaker.

One big exception was the Canadian dollar. It’s increasingly vulnerable to an aggressive White House trade agenda but it was a domestic speech that sank it on Tuesday. The BOC’s Poloz said the country will be able to handle more growth without inflation than believed and that the central bank wanted to allow firms to build capacity without choking out the recovery. USD/CAD is back close to the 1.30 level it flirted with last week.

The upcoming calendar features a few notable events starting with the RBA’s Kent at 2210 GMT. The Australian dollar fell late on Tuesday but finished close to unchanged. Japan is in focus at 2350 GMT with the minutes of the latest BOJ meeting and January machine orders, which are forecast to rise 5.2% m/m.

However it will be politics continuing to dominate. The Abe government has been swept up in a document forgery scandal and in Pennsylvania voters will put Trump to the test. A House district he won by 20 points in 2016 is up for grabs and could go to a Democrat. There are no immediate implications for markets but it could pit him against Congressmen who are afraid of losing elections in November.

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Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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