Today's Highlights
Trump Raises the Ruble
Draghi Today
Insomniac Trading Tonight
Please note: All data, figures and graphs below are valid as of February 6th. All trading carries risk. Only risk capital you're prepared to lose.
Putin's Pride
While the United States is getting over an incredible comeback victory by the New England Patriots, a mediocre performance from Lady Gaga, and way too much guacamole, the stock markets in Asia are having an amazing start of the week.
Donald Trump raised a lot of eyebrows yesterday with some outlandish statements that seemed to support Putin's murderous habits and justify them by saying that America murders their fair share of people as well. Vice President Mike Pence is now working double time to try to get Donald's foot out of his mouth as politicians from both parties slam Donald for making statements that, while maybe accurate, are obviously destructive to the nation.
This is no doubt that part of his strategy to get everyone's attention off the fact that his travel ban is not going as well as he planned and to distract the country while he cooks up his next publicity stunt.
The US stock markets, for now, are taking comfort in the fact that checks and balances are working and that the courts were able to suspend Trump's travel ban.
The Russian ruble opened the weekend significantly higher against the USD, on the back of those comments and more that indicate that Trump is showing more concern for Putin's interests than his own country's.
Market Overview
The stock markets around the world continue to rise on low volatility. It's a fairly shocking phenomenon but it seems there's still some leftover capital from all the quantitative easing money that's been pumped into the system over the last decade. As that money is finding a home in the stock markets, investors wonder when it will start to dry up.
The dollar has been beaten pretty badly so far this year but managed to start this week on a good note. If it manages to get over 100 and stay there it will be a pretty positive sign. As well if Trump manages to make some headway on tax reforms or fiscal spending, it could also spark some buying.
The British pound is a clear victim of the dollar's relative strength. After reaching the high of 1.27 the GBP/USD is now on the back foot as politicians in the UK continue to debate the Brexit.
Gold, on the other hand, doesn't seem to be deterred by the dollar's bounce off the lows. At the moment we're seeing some resistance at $1225 an ounce, but a strong break of that level will certainly generate interest, especially if the dollar continues its decline.
Usually, gold trades against the US dollar but this morning it's simply not. In this chart we can see gold in white and the USD in red. Notice how the dollar rising in the last few hours has not pulled gold down at all.
What's next?
It's not on most economic calendars but could prove important. Mario Draghi will be speaking in Brussels today.
With all the mess of geopolitical news coming out lately, Draghi has largely been able to fly under the radar of his critics, since they've been busy with more pressing matters.
However, the question of the ECB's incredibly large stimulus package will be very much in focus today. If he in any way concedes or even hints that the ECB is winding down their purchasing policy, it could send the Euro soaring. After all, the euro weakness that we've seen over the last few years is largely due to their aggressive spending habits.
Got Insomnia?
If for any reason you can't sleep tonight, or if you live in Australia and you're up early tomorrow, we have an RBA interest decision that will likely move the Aussie dollar.
Remember, the AUD/USD has been flying lately both due to a weaker dollar and strong economic figures from Australia. Their higher interest rates also make the AUD a prime target for carry-trading during these un-volatile markets.
If the RBA decides to jawbone the currency, there's certainly a lot of falling it can do without running into any major barriers.
Wishing you an amazing week ahead.
Disclaimer: This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.