Today's Highlights
Risk is Back
Mexico en Focus
TRY not. Do, or do not.
Please note: All data, figures & graphs below are valid as of January 25th. All trading carries risk. Only risk capital you can afford to lose.
Market Overview
As soon as he said "pipeline" it was all over. Barack Obama fought tooth and nail for years to block Keystone XL and Dakota from happening, and this new guy comes in on his second day in office, waves his magic pen, and wills these massive pipelines into reality.
This along with a successful meeting with the Big Three car makers created more excitement than Wall Street could contain and the stocks started shooting to the sky.
Risk assets like stocks and indices are flying to new heights with the S&P500 and Nasdaq closing on record high levels. The Dow Jones is now just 50 points from the coveted 20,000 level. The party balloons are currently being re-inflated.
The Ger30 and Fra40 opened this morning with an enormous gap up, which is not good for our clients at the moment who are currently shorting the DAX with full power.
Gold and Bitcoin fell. The physical stuff is currently holding support at $1200, while the digital doesn't have any support until $775 a coin. Investors in eToro are currently reducing their exposure and waiting patiently for a better price to jump back in.
Oil rose on the sheer excitement coming from the energy sector, but quickly relaxed as investors realized that Trump's protectionist policies could easily make a push for American self reliance on oil.
At the end of the day, no matter how deep OPEC cuts, losing their top buyer would hurt the price.
The Australian dollar also managed to take a large hit last night after some disappointing inflation numbers. The RBA doesn't intend to lower their interest rates any time soon and so the next move is likely to be a hike. However, with 0.5% inflation they won't be able to do that any time soon.
All this as volatility on the stocks is reaching extreme lows. The VIX index closed yesterday at a disgusting 11.07, while volatility on the currency markets is the lowest it's been since November 9th.
Turkish Delight
The Turkish central bank failed to raise their interest rates yesterday. Economists were really expecting something, so when they got nothing the reaction was significant.
Since the announcement the TRY has continued its monumental slide against the greenback.
Mexico on a Platter
Since the early days of his campaign Trump has been incredibly tough on Mexico, and though many of his campaign promises have been murdered and buried, he assures us in a tweet last night that the wall is coming...
Big day planned on NATIONAL SECURITY tomorrow. Among many other things, we will build the wall!
Today the Mexican Foreign Minister and Economic Minister will travel to Washington DC to meet with Jared Kushner and Reince Priebus. This two day mini meeting will lay the groundwork for the big meeting between Trump and Nieto, which is set for January 31st.
As the Mexicans see it, there's already a deal in place called NAFTA, which is legally binding and they have no reason to give that up unless they get a better deal for themselves.
As Trump sees it, NAFTA is a terrible terrible horrible trade deal, possibly the worst trade deal ever signed, and needs to be replaced ASAP.
The peso, of course, has been one of the most volatile currencies since the election and is moving in leaps and bounds with every update on these negotiations. So keep your eye on the USD/MXN this afternoon because we're sure to get some action.
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.