Rosen's Daily Commentary

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Dow Jones hit an all time high after Trump won the Presidential elections. The index reached just five points shy of 20,000 and is currently trading at 19,852. The skyrocket rally occurred due to the high expectations of market participants that Trump will actually make America great again. The reality, however, does not have anything to do with the latest rally in US stocks. Earning reports are not that impressive and job growth is at the same place as pre-election times.

Inflated expectations allowed the US companies to improve their earnings performance, but eventually reality may not be able to keep up with expectations. After a twilight period the price trend may be reversed. If Trump does not manage to sustain the rapid growth in US equities prices, the problems will surface and the earnings will collapse.

US companies and hedge funds are optimistic about the Trump presidency as he has surrounded himself with the intellectual and financial elite. In light of this, all the great minds that run the capitalist world are gathered under one roof towards one common goal - the wellbeing of the United States. All of this suggests that what we are about to see will be game changing.

 

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EUR/USD is trading to the downside in today's early European hours as market participants are expecting the speech of Theresa May that may influence the Sterling. Traders are heading to the stronger US dollar in an attempt to preserve their capital in case of unwanted volatility in the UK currency. CMP 1.0584 EUR/USD.

 

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EUR/USD is trading to the upside in today's session after the selling ended yesterday. The pair is now 1.0676, close to day high at 1.0678. Theresa May's speech may affect the currency pair as traders might flee from Sterling on signals for a hard Brexit.

 

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GBP/AUD is trading close to major support at 1.5750. The pair is in its worst performance since the beginning of September 2015 when it started going downhill. Then in mid-2016 Brexit came and made things worse and now the pair is at a 4 year low. The last time GBP/AUD reached below 1.60 was in 2013 when it bottomed out at 1.4380.

Now the pair is trading at 1.6150 as bulls find it hard to push above the 200SMA at 1.76. They tried to go higher in the last two months of 2016 and made it to 1.72 but bears took the stage again and now the near future of the Sterling looks fragile.

Today we have important news coming out of Britain - GBP Consumer Price Index. If it's good, then we should see the Sterling go higher, but if not, the major support level is exposed to bear attacks.

 

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The Sterling took off after Theresa May's speech to pursue a hard Brexit and exit the common EU market. Traders and investors apparently believed in her words that a hard Brexit would be positive for the UK as the country expects to come out stronger than when they were a part of the EU. She emphasized that an exit from the EU is not an exit from Europe and would pursue to keep an open market between the UK and the EU.

All of this signaled a buy and the Sterling valued against all its competitors. GBP/USD reached a high of 1.2415 a few hours after the speech, up from 1.1985.

Currently, minor selling has occurred which is probably some profit-taking and the pair has devalued to 1.2270. The move, worth noting, was a reflection on May's outlook for the future and not actual facts so the retrace can be expected to continue.

 

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EUR/USD is trading on the lower side today after yesterday's speech of Theresa May injected some optimism into the European currency, driving the attention away from the US dollar. Today the pair is back below 1.07 currently trading at 1.0667.

 

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GBP/JPY is in its fourth day of consecutive gains going from 136.40 to a high of 141.50. The pair reacted to the bullish remarks made by May in her speech to pursue a hard Brexit. Usually when traders and investors buy the Sterling, they sell the Yen causing it to depreciate against all of its peers.

In the case of GBP/JPY, market participants favored the Sterling and what we currently observe is the continuation of the move that started a few days ago. The short-term outlook looks bullish only if bulls manage to push through the 200SMA that is occurring in current market price. A few attempts have proved successful in the near-past so bulls still have the advantage.

On the other hand, the inauguration of Trump might turn out to be a bearish signal for the US dollar, as we already saw a 10% rise in US equities and it's unlikely that the move can hold on much longer. In light of this, what could be happening is buy the election, sell the inauguration, in which case, the Yen might again start to appreciate.

In other news, in less than a day we will witness how Trump becomes President! Markets are anticipating the historical event and high volatility can be expected.

 

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EUR/USD is trading absolutely unchanged since yesterday's level around the 1.0660 level. The pair appears to be anticipating the Inauguration of Donald Trump as President of the United States of America. High volatility can be expected and traders are advised to use low leverage and small positions as market can go either way.

 

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EUR/USD is in its third day of consolidation at 1.0660 as market participants are cautious of the upcoming Inauguration of Donald Trump. High volatility remains the main factor that can take over the markets today.

 

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USD/CHF is trading down today going below 1.0100. The pair is now 1.0060 as traders and investors have paused their buying and selling to witness the Inauguration of the 45th President of the US.