Today's Highlights
Trump May Lovefest
US dollar Rising
USA Growth Figures Today!
Please note: All data, figures & graphs are valid as of January 27th. All trading carries risk. Only risk capital you can afford to lose.
His Trumpiness
Investors are still happy about the 20k milestone being crossed but the spat with Mexican President Enrique Peña Nieto is causing some to be nervous. It seems that Enrique was able to out-trump Trump by calling his bluff.
The exchange went a little like this...
Trump: Yeah, Mexico is going to pay for the wall. If they're not then they shouldn't come to meet me.
EPN: Fine, the meeting is cancelled.
Trump: Ok. Well, now we're now going to tax all Mexican imports by 20%.
The sheer nature of this childish conversation was enough to take the momentum right out of stock market. The world is looking very closely at Trump’s first 100 days to see what type of President he will be. Well, we're getting a pretty good look at the moment.
His next test will come today as he meets with Theresa May. This should be an easy win for both countries. The United Kingdom is not legally allowed to start making deals until Brexit is complete in 2019. So all they need to do is shake hands, smile, and announce their intention to put together an amazing deal.
However, if Trump decides to employ his unpredictability tactic and start trying to add pre-conditions, plays hard to get, or tries something else entirely inappropriate it could have disastrous consequences for global stocks. It's one thing to say you're going to play hardball, but it's an entirely different thing to try to bully a friend in need.
Market Overview
After the wild Dow 20k party, it seems that most indices have a hangover today. The reduced volume due to the Chinese New Year is also adding to the melancholy stock markets.
The US dollar is very firm today and rising steadily. See, analysts were saying that if Trump is successful the dollar should rise but in fact, we can see the opposite playing out so far.
While Trump was looking pretty, the stocks partied hardy but the dollar pulled back. Now that the yellow-haired President is faltering, the stocks are being second guessed and the dollar is crushing it.
Now let's look at a few graphs to see Benjis in action.
Here we have the USD/CNH, the dollar clearly taking advantage of the New Year celebrations...
The Japanese also had a reason for their currency to get weaker. Last night the CPI numbers came out showing that despite the rest of the world beating off deflation, Japan is still struggling with it. In response, the BoJ was forced to buy more bonds, which flooded the currency.
Here's the USD/JPY:
Gold of course, is getting softer as it's been trading directly against the USD lately. This morning we're seeing the price as low as $1181 an ounce.
USA Growth Figures
Aside from the geopolitical updates, which are always fun, we have a few items on the calendar that should cause the markets to move.
The highlight, of course, is the Advance GDP number coming from the USA. This is more of a reflection of Barack Obama's job than it is Trump's, but that won't stop him from taking credit if the numbers come out strong.
Analysts are forecasting a growth of 2.1% for Q4, but these type of estimates are not always accurate.
In addition to the GDP numbers, there are a bunch of other things to look out for including European M3 money supply, US Durable Goods, and the last announcement of the week, UoM Consumer Sentiment and Inflation Expectations.
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.