Donald J. Trump the 47th President of the United States of America

Yesterday, Donald J. Trump was sworn in as the 47 President of the United States of America. Starting with his economic policies, President Trump according to Bloomberg stated yesterday that the administration is considering the imposition of a 25% tariff on imports from Mexico and Canada starting on the 1^st of February. The imposition of tariffs by the Trump administration has resulted in both Mexico and Canada implying that they would retaliate in kind. Market-wise, the announcement may have aided the dollar whilst weighing on the CAD. However, we remain vigilant as to whether or not the tariffs will be imposed and if they will be in the same format as mentioned above, i.e a 25% tariff.In the US Equities markets, President Trump announced that he would be revoking Biden 50% EV target and per Reuters has frozen unspent charging funds. The move could potentially weigh on EV car makers such as Tesla (#TSLA) as President Trump per the same report, may be considering ending EV tax credits. In turn, this could potentially weigh on the aforementioned company’s stock price. In the energy markets, President Trump during his inauguration stated that America would “drill baby drill”, in addition to refilling the Strategic Petroleum Reserve. The notion of “drill baby drill” may imply that America is opening the oil tap and thus could lead to a significant increase in oil supply during the President’s term and thus could weigh on oil prices as supply may exceed demand. On the other hand, the notion to refill the strategic petroleum reserve may alleviate some concerns about an increase of oil supply in the near future. Overall, in our view, the administration’s energy policies could weigh on oil prices. Over in the UK, the nation’s unemployment rate for November increased from 4.3% to 4.4% implying a loosening of the labour market. In turn, this may weigh on the pound, as it could increase pressure on the BoE to cut rates in their March meeting as well.

EUR/USD appears to be moving in a sideways fashion, after breaking above our downwards-moving trendline which was incepted on the 6 of December 2024. We opt for a sideways bias for the pair and supporting our case is the aforementioned breaking of our downwards-moving trendline, in addition to the RSI indicator below our chart, which currently registers a figure of 50, implying a neutral market sentiment. For our sideways bias to continue we would require the pair to remain confined between the 1.0330 (S1) support level and the 1.0450 (R1) resistance line. On the flip side for a bearish outlook, we would require a clear break below the 1.0330 (S1) support line with the next possible target for the bears being the 1.0195 (S2) support level. Lastly, for a bullish outlook we would require a clear break above the 1.0450 (R1) resistance line, with the next possible target for the bulls being the 1.0595 (R2) resistance level.

XAU/USD appears to be moving in an upwards fashion, with the precious metal’s price currently taking aim for our 2743 (R1) resistance line. We opt for a bullish outlook for the precious metal’s price and supporting our case is the RSI indicator below our chart which currently registers a figure near 60, implying a bullish market sentiment, in addition to the upwards moving trendline which was incepted on the 30 of December. For our bullish outlook to continue, we would require a clear break above the 2743 (R1) resistance line, with the next possible target for the bulls being the 2788 (R2) resistance level. On the flip side for a sideways bias we would require gold’s price to remain confined between the 2690 (S1) support level and the 2743 (R1) resistance line. Lastly, for a bearish outlook, we would require a clear break below the 2690 (S1) support level with the next possible target for the bears being the 2622 (S2) support line.

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Today we note the release of UK’s employment data for November, and later in the European session, we get Germany’s January ZEW indicators and later on, Canada’s December CPI rates and New Zealand’s Q4 CPI rates.