Please note: All data, figures and graphs below are valid as of December 5th. All trading carries risk. Only risk capital you're prepared to lose.
Let's start with the obvious...
Referendum Italia
As you probably already heard, Matteo Renzi's constitutional reform referendum was squashed by a resounding majority. As promised, Renzi has resigned and the political future of Italy hangs in the balance.
The No vote was widely expected, yet the impact on the markets was huge. Last night saw wild gyrations across the markets. The EUR/USD was behaving more like a fish out of water than a currency as it gave the 1.05 level a very serious test.
Clients in eToro, who were previously very bullish on the euro have been reducing their overall exposure lately. Two weeks ago, we were looking at overall volumes that were more than 85% long. Over the past two weeks, traders have been abandoning their long positions, but still, with the euro this low, it's difficult to resist this kind of deal.
Currently, about 65% of volume is long with the average stop loss at 1.0380.
Still, there are plenty of traders who are short and expecting a breakout.
The next big thing
President-elect Donald Trump has been shooting his mouth on Twitter again. This time his attacks were against China. First, he made the "mistake" of speaking directly with the president of Taiwan. China, of course, would prefer that other countries speak with them on all issues related to that country.
Trump's reply:
Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into...
Even though Trump can't officially label China a currency manipulator until he takes office, he spelled it out for us pretty clearly. He then continued with attacks on their military effort:
their country (the U.S. doesn't tax them) or to build a massive military complex in the middle of the South China Sea? I don't think so!
I don't know about you, but that last one seems a bit like the pot calling the kettle black. I mean, how could the US possibly criticize any other country for building military outposts????
Whether this was a random outburst or a calculated negotiation tactic remains to be seen. In any case, this does seem like a good taste of the type of unpredictability we'll be seeing from the White House in 2017.
With this type of political uncertainty between the world's two largest economies, I'm very surprised to see gold and silver falling this morning. Something is just not adding up.
What's else?
Where to begin?
There are many headlines that are impacting the markets in a big way....
The President of New Zealand just resigned today after 10 years in office.
The Brexit case is being heard by the UK Supreme Court.
The Mexican Central Bank Governor is stepping down.
Austria has a new pro-euro President.
There's a lot more going on as well, just keep your eyes and ears on the news in this fundamental driven market.
With all that, the highlight for the markets this week is likely to be the ECBs interest rate decision on Thursday followed by a press conference with Mario Draghi.
But tonight... we have an interest rate decision in Australia.
The Winds
With so many winds of change blowing all at once, it's turning out to be a very blustery market indeed.
So where are the financial markets headed??
The answer my friends, blowin in the wind.
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.