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Kathy Lien

Kathy Lien

Kathy Lien is an Internationally Published Author and Managing Director of BK Asset Management. Her trading books include the following: 1) For beginners, “The Little Book of Currency Trading (2010, Wiley).” 2) THIRD edition of the highly acclaimed, internationally published “Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2015, Wiley).” 3) Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley) 4) High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia)

Articles by Kathy Lien

Great Week for Dollar, Euro Recovery Ahead?

1 day ago

Great Week for Dollar, Euro Recovery Ahead?
Daily FX Market Roundup 01.17.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The US dollar wraps up another good week with gains against most of the major currencies. The only exceptions were the Swiss Franc which climbed to its strongest level in 3 months and the Canadian dollar, which held onto its recent gains. Investors brushed off softer US inflation data in favor of stronger retail sales, manufacturing activity and pickup in housing starts. However stabilization in US yields and the record breaking moves in US stocks are the primary reasons why investors are piling into US dollars. In the week ahead, there’s very little to deter the greenback’s positive outlook as there are no major market moving economic

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Dollar Bulls Charge Ahead as Data Validates Rally

2 days ago

Dollar Bulls Charge Ahead as Data Validates Rally
Daily FX Market Roundup 01.16.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The Dow Jones Industrial Average climbed to fresh record highs while the US dollar rose to its strongest level in 8 months against the Japanese Yen on the back of stronger retail sales. After weeks of disappointing economic reports, investors wanted to see data validate the rallies so they jumped on the report when it released, driving equities and currencies higher. Is the US economy out of the woods? Certainly not, but given how the market shrugged off softer releases like non-farm payrolls and CPI, a strong report was bound to have a bigger impact on the greenback than a weak one. Despite slower wage growth, consumer spending

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Will 2020’s First NFP Report Help the Dollar?

9 days ago

Will 2020’s First NFP Report Help the Dollar?
Daily FX Market Roundup 01.09.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
It has been a good week so far for the US dollar and on the eve of the first employment report of the year, the greenback extended its gains against all of the major currencies. The rally was fueled by the record breaking moves in US stocks and encouraging words from Federal Reserve Presidents. Bullard for example sees a soft landing this year, Evans described the economy as being in a good place, Barkin is encouraged by the jobs report and pace of holiday spending while Kaplan sees 2-2.5% GDP growth in 2020 with possibly even stronger growth if the headwinds ease. The initial panic following Iran’s retaliation to the killing of a key

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First Full Week of FX Trade to Kick Off with a Bang

15 days ago

First Full Week of FX Trade to Kick Off with a Bang
Daily FX Market Roundup 01.03.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
As January kicks off, profit taking has been the primary trading theme in FX. For the second day in a row, all of the major currencies traded sharply lower on the back of renewed geopolitical tensions and softer economic data. According to the latest reports, manufacturing activity in the US contracted at its fastest pace in more than a decade. FOMC minutes confirmed that rates will stay low for long and unemployment rolls in Germany rose more than expected. Yet what made investors the most nervous was US-Iran relations and the possibility of a forceful revenge by Iran on the US after President Trump confirmed that a top

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Dollar and Euro’s Election Year Trading Behavior

16 days ago

Dollar and Euro’s Election Year Unique Trading Behavior
Daily FX Market Roundup 01.02.20
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On this first official trading day of 2020, we want to take a look at the most important / influential event of the year – the US Presidential election. From rewriting the US/Canada/Mexico trade deals to imposing harsh tariffs on the US and other parts of the world, President Trump’s policies reshaped the global economy. While he can take credit for presiding over record breaking moves in US stocks, his policies also led to slower growth across the globe. Another 4 years of Trump and the US could have drastically different relationships with many countries. However that’s not our immediate concern because the Presidential

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FX: Most Important Themes of 2020

18 days ago

FX: Most Important Themes of 2020
Daily FX Market Roundup 12.31.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On this last trading day of the year, we want to take a look at some of the most important themes of 2020.
For the forex market in particular, we see four primary drivers –
1. US-China Trade War – US and China trade relations will remain front and center. In early January, we expect the Phase 1 trade deal to be signed but the broader trade war may last past 2020. The key question is whether it will worsen or stabilize ahead of the November election. There’s no question that it will in a major issue for all Presidential candidates but more tariffs in 2020 would only restore risk aversion and risk sending stocks tumbling lower. One of President

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Year in Review: What Shaped FX in 2019

19 days ago

Year in Review: What Shaped FX in 2019
Daily FX Market Roundup 12.30.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
2019 has been a busy year for the financial markets. The biggest driving forces were trade war, global easing, Brexit and record breaking moves in US stocks. Hong Kong dissolved into political chaos and President Trump became the third President in the history of the United States to be impeached by the House. One would expect that these political developments would have made investors nervous and drive stocks lower but all of the major indices across the globe enjoyed gains. In the US, the Dow Jones Industrial Average rose more than 20%, the S&P 500 is up nearly 30%, the DAX is up 25%, FTSE is up more than 12%, the Nikkei gained 19% and

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Does New Year Mean New Breakouts in FX?

22 days ago

Does New Year Mean New Breakouts in FX?
Daily FX Market Roundup 12.27.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
In this last full trading week of 2019, the US dollar pulled back against all of the major currencies. It has actually been a rough month for the greenback, but the declines come after a strong November. In general, 2019 has been a good year for the dollar but it peaked at the end of September with losses accelerating in December. The New Zealand and Australian dollars performed particularly well this month, enjoying the strongest gains as both currencies hit 4 month highs. The Reserve Bank of Australia has been one of the most accommodative central banks but after 3 rounds of easing including a cut in October the Australian dollar finally

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Boxing Day FX Rally

23 days ago

Boxing Day Rally in FX
Daily FX Market Roundup 12.26.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
All of the major currencies benefitted from the post Christmas / Boxing Day rally. No major economic reports were released today but in this otherwise quiet day, risk appetite benefitted from a slightly stronger US jobless claims report. The main catalyst however were reports from China that they are in the process of organizing a Phase 1 trade deal signing ceremony. Throughout these discussions, China has been lukewarm about the trade agreement, expressing less enthusiasm than the US but today’s comments is the strongest confirmation to date that there will be no reneging on the deal. The Chinese also said they are examining ways to stimulate the economy

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Dollar Risks – Impeachment, Data, North Korea

26 days ago

Dollar Risks – Impeachment, Data, North Korea
Daily FX Market Roundup 12.23.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
First, I’d like to wish all of our readers a very happy holiday. It has been a genuine pleasure writing for you this year and I hope that you’ve enjoyed my commentary. We’ve got some exciting announcements in the coming year so please look out for our emails.
It should be no surprise that trading was quiet on Monday, which was the last full day of for the markets before the Christmas holidays. For anyone who hasn’t taken the next 2 weeks off, its half day for most traders on Tuesday with all markets closed on Wednesday. Although US markets reopen on Thursday, many European and Asian markets remain closed for Boxing Day. Less

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Stocks Hit Record Highs, Pushing USD Higher

29 days ago

Stocks Hit Record Highs, Pushing USD Higher
Daily FX Market Roundup 12.20.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
On the last full week of 2020 trading, US stocks hit record highs. This strong performance combined with better than expected data breathed new life into the US dollar on Friday. The greenback ended the day up against all of the major currencies except for the Australian dollar and sterling. However on a weekly basis, it is not nearly as strong, rising only versus the euro and sterling, falling against the Swiss Franc, Australian and New Zealand dollars and holding steady against other currencies.
Personal incomes grew more than expected, the personal consumption component of Q3 GDP was revised higher along with the University of

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US Dollar Pulls Back on Softer Data, Pre-Holiday Flows

December 19, 2019

US Dollar Pulls Back on Softer Data, Pre-Holiday Flows
Daily FX Market Roundup 12.19.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The US dollar traded lower against all of the major currencies today following weaker than expected data. Existing home sales, declined more than anticipated in the month of November, manufacturing activity ground a halt while jobless claims ticked higher. Alone, none of these reports are exceptionally market moving but together ahead of the holidays they were enough to drive USD/JPY to a 5 day low. Reports that the US and China will sign the Phase 1 deal in January encouraged some who like a set timeline but discouraged others who hoped for more definitive action. At the end of the day, the Phase 1 deal has not been signed,

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Rate Decisions Ahead for FX

December 18, 2019

Rate Decisions Ahead for FX
Daily FX Market Roundup 12.18.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
In the next 24 hours, the economic calendar is jam packed with market moving data but whether or not currencies respond to these events remain to be seen. There will be 2 monetary policy announcements – one in Japan and another in the U.K. Employment numbers are also scheduled for release from Australia followed by retail sales data from the UK. US existing home sales and Philadelphia Fed index are also on the calendar but these reports should not have much impact on the greenback. Instead, the only currencies that could see big moves are AUD, GBP and NZD. On Wednesday, the US dollar traded higher against all of the major currencies except for the

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EURO – Is an EU-US Trade Deal Next?

December 17, 2019

EURO – Is an EU-US Trade Deal Next?
Daily FX Market Roundup 12.17.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
With the exception of the sell-off in sterling, it was a relatively quiet day in the FX market. Euro traded in a 45 pip range versus the US dollar with an even narrower move of 12 pips during the NY session. For the last 24 hours, the trading range for USD/JPY was a mere 19 pips. There was more volatility in the commodity currencies but even with those moves, watching the quotes was as dull as watching paint dry. Data was mixed with consumer confidence and ANZ activity outlook improving in New Zealand, job growth in the UK increased but wage growth slowed significantly. In the case of the US, house starts, building permits and industrial

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New Trade Truce Fails to Impress FX

December 17, 2019

New Trade Truce Fails to Impress FX
Daily FX Market Roundup 12.16.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
With the December 15th tariff deadline in the rearview mirror, investors breathed a collective sigh of relief today. Equities extended their gains and Treasury yields increased. However given the significance of recent developments, the moves were modest and currencies were mixed which means the deal failed to impress. USD/JPY ended the day higher but AUD/USD and NZD/USD were flat.
The problem is that the Phase one trade agreement is more of a trade truce than a trade deal. China agreed to buy USD$200B in additional goods and services over the next 2 years and make a number of structural reforms. In return, the US will not only forgo

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FX: Nothing Matters More than Trade. Not ECB, Not Fed.

December 12, 2019

FX: Nothing Matters More than Trade. Not ECB, Not Fed.
Daily FX Market Roundup 12.12.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Nothing matters more to the direction of currencies over the next few days than President Trump’s Chinese tariff decision. That includes this week’s Federal Reserve and the European Central Bank’s monetary policy decisions. On Wednesday, Jerome Powell left interest rates unchanged but made it clear that rate hikes are not on the horizon until inflation increases substantially. The US dollar fell slightly but the losses were limited particularly for USD/JPY and today, the greenback soared against most of the major currencies following reports by the Wall Street Journal that US negotiators offered to cut tariffs by 50%. Euro

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FOMC preview – What FX Traders Can Expect from Powell

December 10, 2019

FOMC preview – What FX Traders Can Expect from Powell
Daily FX Market Roundup 12.10.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
Thursday’s Federal Reserve monetary policy announcement is one of the most important events of the week but we don’t expect fireworks. This is the last FOMC meeting of the year and there’s zero chance of a change in policy. However a press conference follows every central bank meeting and there’s always the possibility of market moving comments from Fed Chairman Jerome Powell. At their last policy meeting in October, the Fed cut interest rates for the third time in a row and instead of emphasizing the need for such aggressive measures, Powell described the reduction as a move to insure against softening global growth and

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Big Week for EURO & USDJPY

December 9, 2019

Big Week for EURO & USDJPY
Daily FX Market Roundup 12.09.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
The holidays may be approaching but there’s at least at least one more week of potentially big moves for currencies before we settle into the seasonal lull. With two monetary policy announcements and a big decision on tariffs for US President Trump, an expansion in volatility is almost a certainty. It’s a particularly a big week for EUR/USD and USD/JPY. Both currency pairs saw very little moves on Monday but as the week progresses, breakouts are expected. For the euro, Christine Lagarde will be overseeing her first monetary policy announcement as ECB President. She’s spoken a number of times since taking office but has kept her policy views close to

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USD: Why You Shouldn’t Bank on Strong Non-Farm Payrolls

December 5, 2019

USD: Don’t Bank on Strong Non-Farm Payrolls
Daily FX Market Roundup 12.05.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
US non-farm payrolls is traditionally one of the most market moving pieces of data for currencies and equities but its impact depends on how the jobs report affects monetary policy. In the case of the Federal Reserve, they’ve made it clear that after lowering interest rates three times this year, further easing is unnecessary. So if NFPs rise more than expected, it would validate their on hold stance and alternatively, if the numbers are weak, the central bank will still keep interest rates steady when they meet next week.
Does not mean that the US dollar will shrug off payroll surprises? No.
Economists are looking for very good

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Will Bank of Canada Trigger Breakout in USDCAD?

December 3, 2019

Will Bank of Canada Trigger Breakout in USDCAD?
Daily FX Market Roundup 12.03.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
November was a great month for the US dollar but December is proving to be a challenging one. We are only 2 trading days into the new month, but President Trump is back to his old ways with the market reacting to all of the elusive comments coming out of the White House. On Monday, he called for lower interest rates and criticized the strong dollar. On Tuesday, an avalanche of headlines hit the wires suggesting that trades talks are going nowhere. While Trump keeps on emphasizing that China wants a deal, everyone from Commerce Secretary Ross to Vice President Pence have implied that the bar is high because Trump won’t allow China to

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AUD Breaks Out, Can Gains be Sustained on RBA?

December 2, 2019

AUD Breaks Out, Can Gains be Sustained on RBA?
Daily FX Market Roundup 12.02.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
One of the best performing currencies today was the Australian dollar. AUD jumped nearly 1 percent against the US dollar to its strongest level since November 20th. On a technical basis, this move goes a long way in nullifying the downtrend but Australian data is weak so a fundamental basis, its hard to trust the rally.
According to the latest economic releases, manufacturing activity contracted in the month of November, job ads fell further, inflationary pressures eased and building approvals fell much more than expected – in a nutshell every single one of these numbers showed further deterioration in Australia’s economy. Yet the

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Dollar Ends November Strong, Busy Week Ahead

November 29, 2019

Dollar Ends Month Strong, Busy Week Ahead
Daily FX Market Roundup 11.29.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
November was a great month for the US dollar. The greenback traded higher against all of the major currencies with USD/JPY and USD/CHF rising to their strongest levels since June. After lowering interest rates at the end of October, US policymakers made it clear that despite ongoing trade uncertainty and weaker global growth, further easing was not necessary. Much of this has to do with the persistent rise in US stocks, which hit fresh record highs in November. Looking ahead to the last month of the year, we don’t expect many surprises but President Trump has a very big decision to make about the December 15th tariffs. His options are

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Currencies & Possibility of Thanksgiving Breakouts (charts)

November 26, 2019

Currencies & Possibility of Thanksgiving Breakouts (charts)
Daily FX Market Roundup 11.26.19
By Kathy Lien, Managing Director of FX Strategy for BK Asset Management
It is a holiday week here in the United States and today’s muted moves has investors looking forward to a quiet rest of the week for currencies. The forex market will trade continuously over the next few days but the equity and bond markets in the U.S. will be closed on Thursday with a half day on Friday. However with President Trump expected to make a decision on the HK bill and trade headlines ramping up, we would not be surprised if low liquidity during the holidays led to an expansion in volatility. In fact, currencies actually have a history of breaking out or reaching new milestones the week of Thanksgiving. Just

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Dollar Bulls – 3 Things to Be Thankful for

November 25, 2019

Dollar Bulls – 3 Things to Be Thankful for
Daily FX Market Roundup November 25, 2019
This week, Americans will be thinking about all of the things that we can be thankful for. On the first day trading day of this shortened Thanksgiving week, the US dollar is stronger against all of the major currencies. Dollar bulls in particular have a few reasons to be thankful this holiday seasoning. To start, the Federal Reserve has been very clear that barring any unforeseen shocks, further easing may not be necessary. US data is starting to take a turn for the better and the Dow is trading near a record high. Americans are enjoying the combination of growing portfolio values and low interest rates and the hope is that this will translate into a healthier holiday shopping season. Black Friday

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EUR Hit from All Sides – ECB, PMIs, Good US Data

November 22, 2019

EUR Hit by ECB, PMIs and Good US Data
Daily FX Market Roundup November 22, 2019
The euro was hit from all sides today. First, German PMIs were mixed with the data showing improvements in the manufacturing sector and deterioration in services. Later on, the Eurozone PMIs confirmed that the region as a whole grew at a slower pace due to a continued contraction in manufacturing and slower expansion in services. In between, ECB President Christine Lagarde described the global economy as marked by uncertainty and called for Europe to develop a new policy mix that includes fiscal stimulus. This suggests that regardless of her bias for monetary policy, she feels that the Eurozone needs more policy support. This outlook combined with better than expected US Markit PMIs and an upward

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Big Day for the Euro with ECB Lagarde and PMIs

November 21, 2019

Big Day for the Euro with ECB Lagarde and PMIs
Daily FX Market Roundup November 21, 2019
Friday will be a big day for the euro. There’s a speech by ECB President Christine Lagarde and November PMIs. Since Lagarde became the President of the central bank, she has not made any direct comments on monetary policy. However we know from prior talks that the ECB’s new leader is worried about the threat of nationalism along with the danger of global recession and like her predecessor feels that fiscal stimulus is absolutely necessary to sustain the region’s economy. The key question is whether she feels the need for more monetary stimulus. So far, she hasn’t provided much insight into her views and could choose to remain ambiguous until the next central bank meeting in December. However

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Big Problems for AUD

November 20, 2019

Big Problems for AUD
Daily FX Market Roundup November 20, 2019
The US dollar rebounded against all of the major currencies on the back of less dovish FOMC minutes despite lower bond yields and the sell-off in stocks. The central bank cut interest rates by 25bp for the third time this year in October. The minutes explained the reasons for why back to back easing was necessary by highlighting global growth risks and trade uncertainty. However they made it clear that most policymakers believe that no further easing would be necessary. They felt that the current stance of policy will most likely be appropriate “as long as incoming information about the economy did not result in a material reassessment of the economic outlook.” With that said, the greenback held onto its gains rather

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Dollar Slips Further on Trump Worries

November 18, 2019

Dollar Slips Further on Trump Worries
Daily FX Market Roundup November 18, 2019
The US dollar started this new trading week on its back foot, weakening against all of the major currencies. In our note on Friday, we talked about the possibility of further losses for the greenback but we did not expect it to happen so quickly. Investors are worried about President Trump’s policies following reports that China is pessimistic about trade talks. The President also held a meeting with Fed Chairman Powell after which he expressed satisfaction with their discussion on everything from interest rates, negative rates, easing and dollar strength.
Although we are highly skeptical of Trump’s ability to influence Fed policy, the shift away from his usually critical tone suggests that Powell

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Dollar Ends Bruising Week – More Losses Ahead?

November 15, 2019

Dollar Ends Bruising Week – More Losses Ahead?
Daily FX Market Roundup November 15, 2019
It has been a challenging week for the US dollar as the greenback sold off against most of the major currencies. Weaker US data combined with Federal Reserve Chairman Powell’s benign outlook for the US economy reinforced the market’s view that low rates will be here to stay. Trade talks also hit a snag this week and the ongoing uncertainty is taking its toll on currencies. Unless President Trump officially announces rollback of some US tariffs (which is possible), the dollar is vulnerable to further losses against euro and the Japanese Yen. For other currencies, risk aversion will offset demand, leading to restrained moves in sterling, the Australian and Canadian dollars.
We’ve learned this

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POWELL vs. RBNZ – What’s the Bigger Surprise?

November 12, 2019

POWELL vs. RBNZ – What’s the Bigger Surprise?
Daily FX Market Roundup November 12, 2019
The best way to summarize President Trump’s speech to the NY Economics Club is that it could have been a lot worse for the markets. He threatened a significant increase in tariffs on China if there’s no deal but at the end of the day, nothing new was revealed. President Trump made no mention on how US-China trade talks are going and said nothing about rolling back tariffs. He also did not drop any hints about his decision on EU auto tariffs – market participants were hoping for a delay but an announcement was not made. Reading between the lines, we have every reason to believe that progress in US-China trade talks have been limited. Trump also described the EU as “in many ways is worse than

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