Ben Robson – The week of 13th-17th January 2020

To trade or fade Trump? For a while now there has been conjecture that trading the “tweets” of the US president can lead to profitable opportunities.

By Ben Robson 

And by now most people are used to his belligerent utterances. But is the average trader adept enough to match the agility and speed of high-frequency traders who can take the market from A to B more quickly than the blink of an eye? How about fading the moves? That is, going contrarian, once say a 2, 3 or 4% move has happened? In the current era of ultra-low volatility perhaps this is the trade that I’ve been missing!

I’m not a day trader and so probably won’t “trade or fade” Trump, but it was interesting for me to see how the markets reacted to Trump’s press conference and attempts to de-escalate tensions after failed Iranian retaliatory missile strikes against US bases in Iraq, following the assassination of Iranian general Qasem Soleimani by a US drone attack. Oil and gold receded more or less back to where they had been trading before Soleimani’s untimely death. Stocks marched ever higher. Volatility drifted off. Currency markets moved less than in some Asia early morning currency flash crashes.

To this week and sadly it was reported on Saturday that the downing of a Ukrainian owned Boeing 737 last week, which killed all on board was due to an Iranian military defence strike, adding to a weekly list of mainly Iranian casualties. There will undoubtedly be calls for justice (there were people of many nationalities onboard) but let’s all hope the current heightened tensions in the Middle East continue to dissipate.

It is likely to be the week in which the US House of representatives sends articles of impeachment to the US senate in an effort to oust incumbent President Trump. It is also the week in which two important US data reports are released in terms of inflation and retail sales, China delivers GDP numbers and the UK and Eurozone issue inflation gauges.

US CPI data is released on Tuesday. It is anticipated that US inflation has risen to 2.4% in December from 2.1% in November. UK inflation numbers, out on Wednesday are expected to reveal that UK CPI for December remained at 1.5%. US retail sales are likely to have subtly increased by 0.3% in the month of December. On Friday the University of Michigan’s consumer sentiment survey is likely to have receded to 99 for January from 99.3 in December. The US Federal Reserve will be mindful of inflation creeping up and so Tuesday’s CPI data is probably the pick of the US announcements.

On Friday China releases 4th quarter GDP figures which are predicted to hold steady at 6.0%. Last week China CPI remained at 4.5% Y/Y for December defying analysts who had predicted a rise to 4.7%.

With all last week’s geopolitical uncertainty, we had some reasonable moves and reversions in gold and oil. Perhaps Bitcoin (which broke through 8000) belied the uncertainty trade and is on a genuine stride higher. I remain on the sidelines.

Good luck and good trading!

Ben Robson is the CEO of Spectrex Commodities and author of Currency Kings- How Billionaire Traders Made Their Fortune Trading Forex And How You Can Too.

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