The major US equity index the S&P 500 briefly traded below its closing price the day before President-Elect Trump’s election victory, raising fears about the long-term health of the stock market.
- The S&P 500 index yesterday fell quite strongly to trade below the closing price just before the Trump / Republican election victory, which was a significant milestone that rattled markets due to talk from within the Trump transition team to the effect that the planned tariffs could be implemented gradually, along with rising long-term US Treasury Yields. Stock markets rallied late, but that benchmark will be important to the Trump administration, which has a history of measuring its success by the stock market. However, we are still well within a bull market in US equities.
- Yesterday saw the first day in almost one weak where the US Dollar lost value, although it remains close to fresh 2-year highs. Most currency pairs involving the US Dollar have recently hit multi-year highs or lows depending upon the Dollar’s side of the pairing. The 10-Year US Treasury Yield closed Friday above 4.75%.
- The Bank of Japan’s Deputy Governor strongly hinted at the chance of a rate hike at the bank’s policy meeting next week, stating rates will be raised when the “economic outlook is realized.” This has helped boost the Japanese Yen a bit, which has been holding its own in recent days even when the US Dollar is strong.
- The Forex market is in focus due to the strong movement in the US Dollar. Trend traders will remain interested in being short of the the EUR/USD currency pair. Since today’s Tokyo open, the strongest currency has been the New Zealand Dollar while the weakest currency has been the Japanese Yen.
- Corn futures closed yesterday at a new 1-year high and will attract interest from trend traders on the long side. Some analysts might argue that in the current strong USD environment, there is a tailwind against commodity advances.
- The US 10-Year Treasury Yield a new 1-year high yesterday and will attract interest from trend traders on the long side. Some CFD brokers offer this to traders, and micro futures are available on the CME.
- There will be a release of US PPI data later today, which will be important as it is a key inflation indicator, and US CPI data will be released tomorrow. PPI is expected to show a month-on-month increase of 0.4%.
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