Donald Trump's first address to Congress turned out to be uneventful. His "America first" motto shone through, but he managed not to say anything negative or too dopey. Everybody is still waiting for him to present details on how he is planning to implement the promised tax cuts or provide stimulus to the US economy. I stick with my credo that listening to Trump is a bad strategy; I prefer to watch out for actual implementations of what he promised. I've said this before: Ignore Trump noise. As such I also maintain my EURUSD short position as the overriding narrative of Fed rate hikes combined with economic stimulus and European election risk is still active. Support levels 1.0524, 1.0454 and 1.0341.
USDCAD looks constructive for a long trade targeting 1.3575. Technical analysis, continued USD strength & Canada NAFTA risk supportive. On my watch list.
Open positions as of 01/03/2017 8:50am CET:
EURUSD short from 1.0795, unrealized return: +2.56%
Realized YTD return: +4.34% from 3 trades
Total YTD return: +6.9% from 4 trades
News (real news, apparently) of Donald Trump's plan to renegotiate the North American Free Trade Agreement (NAFTA) made the rounds earlier today. USDCAD advanced somewhat after the news came out, but the move was short-lived. Stephen Schwarzman, Blackstone CEO and Trump's economic adviser, has since clarified that Canada shouldn't be too worried about the president's plan to renegotiate the trade agreement because the tough part of the negotiations would focus on another country (Mexico, duh) as trade between the US and Canada was largely balanced.
Still, the new US administration will certainly request modifications to be made. Talks will include Trump's proposed "big border tax", for example, a possible penalty on Canadian energy exports. Trump has made it very clear already that he doesn't believe in free trade. In his opinion, as stated during his meeting with US business leaders today, free trade isn't anything that really exists. Instead, he proposes a model he calls "fair trade", by which he means that if a country puts a tax on American exports he's going to introduce a tax on imports from that country in return.
I'm refraining from putting on a trade for now to see how things will play out. My bias is toward a stronger USD, however, and my first target would be 1.35 with a possible extension towards 1.40.
Recording from Donald Trump's meeting with US business leaders, courtesy of FOX news (of course):
Open positions as of 23/01/2017 8:58pm CET:
EURTRY short from 4.0524, unrealized return: +0.37%
Realized YTD return: +0.7% from 2 trades
Total YTD return: +1.07% from 3 trades