Well, it is not easy to make sense of the Forex market now. There are still big swings and the swings are quite clean, instead of choppy. That makes them easier to trade. The problem is that there isn’t much of a clear pattern or logic to get hold of. There are a few things that stand out generally in the markets which have worked so far today, though:
- USD/JPY looked bullish at the London open this morning, after dropping very heavily just after the election result. It has continued to advance and has broken some key resistance levels above 106.00. It might be finally running out of steam, but Yen weakness is persisting.
- Global equity markets are seeing a rally, which is holding up. This is very contrary to the expectation that most analysts had – and I must include myself here for the sake of honesty – that a Trump victory would trigger a wide-ranging stock sell off and perhaps even trigger a longer-term bear market.
There are other large movements, but none of them are holding or logical.
There are times where something big happens and the market moves in a persistent way. This is one of those times. You can ask yourself why stocks are going up, but really, whatever the exact reasons, you might want to spend your time making money now and worrying about the reasons later!
I see it as follows: Trump will be likely to want to cut regulations. He will also be desperately trying to stimulate jobs growth in the U.S.A. which means that some Americans companies are going to be getting a tailwind from the U.S. government. At least some of them, anyway. Speculation that Trump will be good for the growth of certain companies is sparking a buying rally.