Hi Everyone,

It usually takes about three months for a new employee to become fully integrated into a company and be able to fulfill their responsibilities to the full extent of their abilities. For an administrative position, it could take a bit longer.

For this President of the United States, I’m not sure that 100 days will be enough.

To say that the market was underwhelmed by President Donald J Trump’s trip to congress is an understatement. We’d been waiting for this event for almost a week and when it finally came, nothing new was announced. It seems that PDJT is still using the same notes and bullet points as he did in his campaign speeches.

We already understand that he wants to cut taxes, deregulate the banks, improve health care, and all that wonderful stuff but what we really want to know is how he plans to do it.

Furthermore, PDJT has been incredibly slow to act in hiring critical workers to run his administration. So far…

  • Nominations confirmed: 15
  • Awaiting confirmation: 18
  • Positions waiting for a nomination: 516

The stock market is clearly content to give this grace period, as we can see by the fact that it refuses to come down, but at the moment investors aren’t even thinking about Trump. Today, there’s something much bigger on the horizon, the Federal Reserve’s next rate rise.

-Mati

Today’s Highlights

  • 34 to 80 in a week
  • Dollar Flying!!
  • Gold on the Backfoot

Please note: All data, figures & graphs below are valid as of March 1st. All trading carries risk. Only risk capital you can afford to lose.

Rates Will Rise Quickly!

There’s no doubt that the Fed has stolen the thunder from the Trump Administration. The markets have a tendency to see what’s right in front of them and at the moment the focus is not on tax reform or infrastructure spending, which could be months away, the focus today is on the Fed’s interest rate decision in two weeks.

Yesterday Fed members John Williams and William Dudley came out strongly in favor of a rate hike in March. The Fed has been ramping up their rhetoric in preparation for this meeting and the markets are buying every word, along with the Dollar.

Market expectations of a rate hike in March have made a massive jump from 52% to 80% overnight. Just one week ago the odds were one out of three, this morning it’s looking like four out of five chances to see this move.

Just look at the green line…

Dollar Out of Control

As the expectations of a rate rise in the US go up, so does the US Dollar as investors are buying the Buck looking to take advantage of the higher interest payments.

This is the US Dollar Index since the election on November 8th. Next barrier is 102…

Here we can see the USDJPY zooming off the lows, up about 200 pips since yesterday afternoon.

Trade with others. Join eToro community and use experience of other traders!

Back Footed Metal

As the Dollar rises Gold is in a weaker position. A stronger Dollar means that you can buy more gold with fewer Dollars and so the price has dropped, but not by much.

In this graph, we can track the price of Gold since Donald’s rise to power. As you can see, the price has been rising fairly steadily since Christmas and we can now draw a support line along the bottom of the rise and see that the price is now sitting exactly on that line.

If you are of the mind that the trend will continue, now could be a good time to get in.

With that, I’ll leave you for today. Please feel free to reach me with any questions or comments. I can see that the European markets have just opened with a massive green gap. Looks like it’s going to be an awesome day!!

Best regards,
Mati Greenspan
Senior Market Analyst

Error, group does not exist! Check your syntax! (ID: 3)