trump-tpp-4x3

Market Review, January 24, 2017

Trump signed three memorandums yesterday; one to withdraw the US from the TPP (Trans-Pacific Partnership) negotiations, another one imposes a hiring freeze on federal workers except for military positions and in the case of national security and the third one, reinstates the so-called Mexico City policy.

The TPP, as it’s known, is a trade agreement with 12 Pacific Rim nations. It was never ratified by the U.S. because of congressional opposition but was strongly backed by the Obama administration. It would create a free trade area stretching from Japan to Chile, and it was seen as an effort to create a counterweight to China, which is not a party to the agreement. Obama struggled to sell many Democrats on the trade deal, in particular because of concerns about how the trade deal would impact American manufacturers and the US workers in that industry.

Even Hillary Clinton, the Democratic presidential nominee who pushed the TPP deal as secretary of state, backed off her support for the deal during the campaign amid pressure from the left.

Trump has said that he also plans to renegotiate the North American Free Trade Agreement, a free trade deal joining the US, Mexico and Canada (NAFTA = North American Free Trade Agreement)

These memorandums triggered mixed feelings for traders as concerns that the multilateral trade regime will see sharp changes under President Donald Trump from a proposed border tax to potential other actions on import tariffs, putting downside pressure on the USD. The mixed feelings and concerns started 2 weeks ago, and continued since Friday when Trump gave his inauguration speech saying his administration would put “America first” and also promised new roads, bridges and highways. But market sentiment was hit by the negative tone of the speech, which underlined uncertainty over how Trump will govern.

EUR/USD is currently trading at 1.07430, near a technical resistance level (50% fibo retracement starting from the support at 1.04).

The pressure on the USD also took the USD/JPY down to 112.5 in the intraday, and is currenty trading at 113.170.

Gold prices gaines as the future of the global trade regime is questioned. Currently trading at $1.214.

U.S. stocks edged lower on Monday as early moves by President Donald Trump highlighting a protectionist stance on trade gave investors cause to rethink the post-election rally.

 

Trump Inauguration_1484859129227_16563065_ver1.0_640_360

Market Review, January 23, 2017

Trump’s inauguration on Friday was greeted with a weaker dollar. As Trump became the 45th President of the United States and as he used his inaugural speech to hit populist themes on halting off-shoring of work that have raised concerns of a trade war with leading manufacturing exporters such as China, the USD dropped against the other major currencies.

“From this moment on, it’s going to be America First,” Trump said. “Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.”

Originally, the USD celebrated Trump on new of his election as people awaited more support to the economy… However, the honey-moon period was over after Trump failed to deliver sufficient information about his economic vision during his first speech after winning the election, two weeks ago. The unclarity turned the dollar’s bullish momentum into a slightly bearish one, raising concerns.

As a rule – when investors are uncertain, and questions are raised – we see safe-haven assets (such as the JPY, CHF & gold) go up, as was the case for the past week and a half.

As well on Friday, data showed that China’s gross domestic product rose 6.8% in the fourth quarter of 2016, in line with expectations. Year-on-year, China’s economy grew at a rate of 6.8%, slightly above expectations for a growth rate of 6.7%. The data eased concerns over a slowdown in the world’s second biggest economy, although worries surrounding the country’s growing debt persisted.

Gold prices jumped on Friday, boosted by a weaker USD, and are currently trading at $1,215.

Crude oil prices (Brent) jumped 2.04% on Friday with investors noting an OPEC meeting over the weekend could confirm solid compliance in a coordinated effort with non-OPEC nations to trim almost 1.8 million barrels per day (bpd) from global production. Brent oil is currently trading at $55.40/barrel.

U.S. stocks closed higher on Friday in a modest but broad-based advance as Donald Trump was sworn in as U.S. President, marking the first time in more than 50 years that a new commander-in-chief has been welcomed by a rising equity market on his first day in office.

 

 

MW-FE020_trump__20170119114723_ZH

Market Review, January 20, 2017

Today, Donald J. Trump will take the oath of office outside the Capitol to become the 45th president of the United States. According to a series of surveys, Trump will be less popular than any new president in modern American history. The numbers suggest that rather than unifying a divided electorate, his transition to power has continued the polarization from the campaign.

More than 60 Democrats in the House of Representatives have said they will not attend the ceremony — many of them citing Mr. Trump’s recent criticism of Representative John Lewis, a civil rights icon.

The official swearing-in ceremony is scheduled to begin at 11:30 a.m. on Friday on the West Front of the Capitol overlooking the Mall. Most of the nation’s dignitaries will be on hand, including Mr. Trump’s presidential opponent, Hillary Clinton, and her husband, former President Bill Clinton.

Trump’s words will be closely tracked by financial markets today, that have seemingly pinned a number of hopes on the President-elect’s agenda already. Investors need to hear him embrace a pro-growth agenda. Currently we can sense financial markets being cautious, on stand-by ahead of Trump’s speech.

Yesterday’s upbeat US data helped the USD hold onto gains agains the other major currencies, but investors are still cautious ahead of Trump’s inauguration. Initial jobless claims fell by 15,000 to 234,000 against the expected rise by 5,000. In additionm, housing starts increased by 11.3% to 1.226 million units last month, beating expectations for a rise to 1.200 milion units.
A separate report showed that the Philly Fed manufacturing index rose to 23.6 last month from 21.5 in November, compared to expectations for a rise to 15.8.

EUR/USD slipped 0.17% to 1.0612, off session highs of 1.0677, after European Central Bank President Mario Draghi acknowledged that the growth outlook for the euro area has improved, but reiterated that quantitative easing can be increased if the outlook becomes less favorable.

After a surprise build in oil supplies, Crude oil prices pared all of the morning session’s gains. Brent oil is currently trading at $54.30/barrel.

Gold prices remain under pressure but the precious metal is still trading above the psychological/technical level at $1,200.

U.S. stocks were lower after the close on Thursday, as losses in the Utilities, Oil & Gas and Basic Materials sectors led shares lower.

 

The seal of the Federal Reserve is seen on a US banknote on June 1, 2016 in Washington, DC.
The Fed has signaled a rate hike could be possible at its June 14-15 meeting, though markets are betting the central bank will wait until the July meeting. / AFP PHOTO / Mandel NGAN

Market Review, January 19, 2017

The dollar posted strong gains yesterday against the other major currencies yesterday, for the first time in five days. For the past few days the value of the USD was under a lot of selling pressure reaching an months low against the other currencies.

The rebound followed a volatile Tuesday during which sterling rose more than 3 percent for its best showing against the dollar since at least 1998. Currency markets Wednesday reversed most of the previous day’s moves.

EUR/USD ↓ – GBP/USD ↓ – USD/JPY ↑.

Fed Chair Janet Yellen said on late Wednesday she sees rate hikes “a few times a year” as the economy continues to recover until it reached the neutral rate which she expects by the end of 2019. “As the economy approaches our objectives, it makes sense to gradually reduce the level of monetary policy support,” Yellen said in a speech prepared for the Commonwealth Club in San Francisco, adding “changes in monetary policy take time to work their way into the economy.”

Crude oil prices are stable ahead of today’s Crude oil inventories data.

U.S. stocks were mixed after the close on Wednesday, as gains in the Basic Materials, Financials and Industrials sectors led shares higher while losses in the Telecoms, Oil & Gas and Utilities sectors led shares lower.

 

Символы различных валют на стене в Дублине 22 октября 2014 года. Доллар опустился в пятницу, и тем не менее взял курс на подъём за неделю к основным валютам, а внимание инвесторов было приковано к двухдневным переговорам стран G20, которые начались в Шанхае. REUTERS/Cathal McNaughton

Market Review, January 18, 2017

BREAKING NEWS

**** A rising number of Democratic lawmakers have said they plan to boycott President-elect Donald Trump’s inauguration at the US Capitol on 20 January.****

——————————————————————————————————————————————————————————-

The USD continued to experience downside pressure yesterday, even more so after President-elect Trump said that the the border-adjustment plan, a proposal that would tax imports and exempt exports, was “too complicated.” Additionally, he said the dollar was “too strong.”

“Our companies can’t compete with them now because our currency is too strong. And it’s killing us,” Trump told The Journal, referring to competition from China.

The major market indexes declined yesterday on Wall Street as investors reacted to an interview given by President-elect Donald Trump.

The Dow Jones Industrial Average declined by 0.30% to 19826.77.

The NASDAQ Composite dropped to 5538.73, a dip of 0.63%.

The S&P 500 dipped to 2267.89, a decline of 0.30%.

The current USD correction might continue for a few more days, but we believe this will only create more opportunities for FX investors. Strong US data should continue to show growth and in turn, be the source of support for the USD.

The pound was up 2.3% at 1.2329 against the dollar following UK Prime Minister Theresa May’s first major speech outlining the plan for Brexit. She confirmed that Britain was seeking a “hard Brexit” — i.e., it will leave the European single market. Separately, data from the Office for National Statistics showed consumer prices in the UK rose 1.6% in December, up from November’s 1.2% print.

As the USD and the precious metal gold have a negative correlation, Trump’s currency comments drove gold prices up yesterday.Gold settled at $1215.50 today, up 1.61%.

 

imf-717536

Market Review, January 17, 2017

The currency that is currenty suffering from the most downside pressure is, without a doubt, the pound.

Hard Brexit fears mount ahead of Prime Minister Theresa May’s speech today, as the understanding is that the country is heading for a “hard” Brexit from the European Union and its single market. With May expected to trigger Article 50 by the end of March, which will start formal EU separation proceedings, the battle lines are already being drawn.

May has so far given very little away about what deal she will be seeking, frustrating some investors, businesses and lawmakers.

“Now we need to put an end to the division and the language associated with it – ‘Leaver’ and ‘Remainer’ and all the accompanying insults – and unite to make a success of Brexit and build a truly global Britain,” May is expected to say.

“It’s clear that sterling is still very vulnerable to ‘hard’ Brexit fears,” said Rabobank currency strategist Jane Foley. “The uncertainty is itself also a negative factor, and I think perhaps that’s one of the reasons for Theresa May’s speech on Tuesday, to provide a little bit of clarification.”

British finance minister Phillip Hammond also gave a thinly veiled warning; “If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short term,” he said. “In this case, we could be forced to change our economic model.”

Following the Brexit vote, the central bank cut British interest rates to a record low and pumped fresh stimulus into the economy, but it is now seeing inflation accelerate as a result of a far too weak pound. Falling almost 20% against the USD and 14% against the EUR, the London stock market (FTSE) is the only party benefiting from that weakness, as investors are buying at “bargain” prices. FTSE has surged 25% since the Brexit.

The weak GBP triggered a momentum for the safe-haven currency JPY, taking USD/JPY down to the current trading price of 113.4!

Gold rose towards 8-week highs ahead of May and Trump. As uncertainty is taking over investors’ bullish sentiment, safe-haven assets get the chance to recover after the Trump victory. Gold prices are trading at $1,210, above the technical/psychological level at $1,200.

Crude prices gained during the Asian trading session as OPEC Secretary General Mohammed Barkindo talked to the media after meeting with Venezuela’s Presudent Nicolas Maduro, saying that OPEC sees market stability in 2017 and that Venezuela is aiming for $70/barrel next.

U.S. stock futures declined today as investors avoided global equities and sought out safe-haven assets, like gold and the Japanese yen. There was also increasing anticipation in advance of Friday’s inauguration speech from President-elect Donald Trump in Washington D.C.

 

 

b461807dd58c2dbe5cdea80356c0c2df_privateequity3-814-363-c

Market Review, January 16, 2017

On Friday we saw the USD continue to trade near one-month lows against the other major currencies as the greenback remained under pressure amid US political concerns and despite good retail sales data.

Donald Trump’s failure to offer details on his promises to boost fiscal spending and cut taxes at a highly-anticipated news conference on Wednesday, triggered downside pressure following a few bullish weeks for the currency.

Overnight, the pound slumped on reports that the British government is prepared to make a “hard” exit from the European Union. GBP/USD traded down 1.13% to 1.2037, after hitting as low as $1.1983, a level not seen since the flash crash of early October.

U.K. Prime Minister Theresa May scheduled for Tuesday where she is expected to announce a hard exit from the European Union. May will announce a “clean and hard Brexit” and prepare to pull the U.K. from the European market and the European customs union in exchange for the ability to control immigration laws and leave the jurisdiction of the European Court of Justice, the Sunday Times reported Sunday.

Gold prices are supported by Brexit fears as investors seek safety. The precious metal is currently trading above the technical and psychological level ($1,200). Last week, gold ended lower on Friday as investors took profits after prices hit a seven-week peak in the previous session, but still notched up a third consecutive weekly gain.

Crude oil prices are pretty stable, despite concerns over the global supply glut. Optimism over the OPEC/non-OPEC supply cut agreement give the commodity enough support

This week, investors will be looking ahead to Thursday’ policy announcement by the European Central bank and Chinese data on fourth quarter growth, due for release on Friday. Today, Monday, U.S. financial markets will be closed for Martin Luther King Day and Bank of England Governor Mark Carney is due to speak at an event in London.

More importantly, Trump will officially take office on January 20 (expect to see markets react strongly).

 

Wall Street recule jeudi dans les premiers échanges, ne profitant pas, contrairement aux Bourses européennes, des déclarations du président de la Banque centrale européenne Mario Draghi, qui laissent entrevoir de nouvelles mesures de soutien à l'économie dans les mois à venir. L'indice Dow Jones perd 0,08% à 15.754,28 points. Le Standard & Poor's 500, plus large, cède 0,24% et le Nasdaq Composite abandonne 0,53%. /Photo prise le 20 janvier 2016/REUTERS/Mike Segar

Market Review, January 13, 2017

The USD hit its lowest level in five weeks yesterday against the other major currencies as loss of confidence in the US economy outlook after a news conference by US President-elect Donald Trump hit the bullish momentum quite hard.

Speculators had driven the dollar index to a one-week high Wednesday in anticipation that Trump’s first news conference since his Nov. 8 victory. Instead, the event was dominated by debate over Russian hacking and unsubstantiated claims that he had been caught in a compromising position in Moscow. The dollar index tumbled as much as 0.9 percent to 100.720, its weakest since Dec. 8, after touching 102.950 before the news conference Wednesday.

GBP/USD is having a hard time recovering, despite a weaker USD and is still trading near all-time lows. A break below 1.2 will trigger further selling pressure. This could happen from either a recovery for the USD or further disappointing news from the UK (Brexit update or bad UK economic data).

Yesterday, Saudi Arabia announced it has cut output by more than agreed – pushing oil up over 1%. This news came as a surprise after investors were disappointed by the Crude oil inventories data the day before.

Gold reached $1,206 during the intraday yesterday and finally settled at $1,195. $1,200 is a strong psychological & technical level for gold and we might see some resistance before the commodity will be able to push higher.

U.S. stocks were lower after the close on Thursday, as losses in the Financials, Technology and Oil & Gas sectors led shares lower.

 

Trump-press-conference

Market Review, January 12, 2017

Yesterday proved to be a very volatile trading day, with the USD starting off the day much stronger compared to its rivals, as investors awaited a highly-anticipated press conference by US President-elect Donald Trump that was scheduled for the late afternoon.

The press conference was Donald Trump’s first appearance  since his electoral victory in November. Market participants were eyeing any further information on Trump’s future economic policies.

After Donald Trump failed to offer details on his promises to boost fiscal spending and cut taxes, the dollar dropped against the other major currencies and moved back towards one-month lows against the percieved safe-haven currency yen. President-elect Trump did not elaborate on his planned growth policies, and instead took aim at targets that included pharmaceutical companies and U.S. intelligence agencies.

The dollar index had climbed to its highest levels since 2002 as investors bet Trump’s promises of fiscal expansion and tax cuts would boost growth and inflation, prompting a faster pace of interest rate hikes from the Federal Reserve and boosting the yield on the greenback. While some investors who missed out on the dollar’s post-election rally were still looking to buy on dips, others were seeking to pare their long dollar positions in case the coming reality of Trump’s administration fail to live up to expectations.

Gold prices celebrated following Trump’s press conference, raising questions about his views and goals as the next US President. As always, “when in doubt, buy gold”… Gold prices reached $1,197 yesterday, eyeing the $1,200 psychological & strong technical level, next.

Crude oil prices were also boosted, despite a terrible rise in US crude inventories, rising by the most in over a month, as the USD weakened, and on the news that Saudi Arabia cut exports to Asia. Brent futures were up $1.76, or 3.3 percent, at $55.40 a barrel. During the overnight session, prices dipped as investors had the time to adjust to Trump’s conference and reassess the supply glut situation.

U.S. stocks were higher after the close on Wednesday, as gains in the Oil & Gas, Utilities and Basic Materials sectors led shares higher.

 

The-risk-of-trading-currency

Market Review, January 11, 2017

“The euro may not exist in 10 years’ time” – French presidential candidate Emmanuel Macron.

The former economy minister under Socialist President Francois Hollande said yesterday that the euro will have no future if Paris and Berlin fail to bolster the single currency union, adding that the current system benefited Germany at the expense of weaker member states.

His words and views will not be taken well by German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble, whose conservatives face an election this year and have faced domestic resistance to bailouts for Greece by hawks who say such payments turn the euro zone into a “transfer union”.

These comments are likely to put some downside pressure on the EUR in the opcoming days, until an official member of the EU will decide to address Emmanuel’s views.

During yesterday’s trading day, we saw the USD showing weakness against the other major currencies as investors are concerned ahead of President-elec Trump’s press conference scheduled for today at 18:00GMT. Investors are concerned that Trump may roil world markets by taking a tough stance on China, trade policy, and Mexico.

Despite the concerns, the dollar edged up during the overnight session with mixed sentiments taking over.

The dollar rally sparked by Trump’s surprise victory in the November election has shown signs of fading, as the index has gone from a 14-year peak of 103.82 scaled on Jan. 3 to a low of 101.30 over the past week.

Amid jitters ahead of President-elect Donald Trump’s first news conference since his election victory, gold prices rallied to a six-week high yesterday and the precious metal is currently trading at $1,189.15.

Crude oil prices dropped further yesterday, after the API reports showed a 1.5m barrels crude gain, above the expected 900,000 barrels.
More closely-watched are the Crude oil inventories which will be released today at 15:30GMT.

U.S. stocks were mixed after the close on Tuesday, as gains in the Consumer Services, Basic Materials and Healthcare sectors led shares higher while losses in the Oil & Gas, Consumer Goods and Utilities sectors led shares lower.