Articles

Just out:

• Trump says thinking in terms of 25% tariffs on Mexico and Canada

In the Wrap yesterday I warned to watch out for a reversal:

• set up a retrace higher for USD. A sharp one I’d suggest. Something to eye in the hours ahead.

It took a while but here we are … and yeah, a sharp one indeed:

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump giving a bid to the USD after its huge slump since Sunday (US time):

Trump speaking with media, says intends 25% tariffs on Canada and Mexico next week

• “We’re thinking in terms of 25% on Mexico and Canada.”
• “I think February 1.”
• “I think we’ll do it Feb. 1. On each.”

This article was written by Eamonn Sheridan at www.forexlive.com.

On Monday, Trump rescinded a 2021 executive order issued by President Joe Biden, which aimed to make half of all new vehicle sales electric by 2030

• the 50% goal was not legally binding
• but it had gained backing from both U.S. and international automakers
• Trump also intends to instruct agencies to review regulations that impose stricter emissions standards, requiring automakers to ensure that between 30% and 56% of their vehicle sales are electric by 2032 to remain compliant.

US equity markets were closed on Monday for the Martin Luther King holiday.

Eyes will be on Tesla shares when markets open again on Tuesday.

Old pic from China – any Teslas in it? I wouldn’t know being a bit of an ICE guy.

This article was written by Eamonn Sheridan at www.forexlive.com.

USD/JPY update, no fresh news as yet.

The pair dipped under 155.00 in early Tokyo trade:

That horizontal line is mine, but I don’t have a lot of faith in it. I am sure traders out there reading ForexLive will have better technical analysis than my precarious line here?

This article was written by Eamonn Sheridan at www.forexlive.com.

Trump signed a large package of executive orders, none of them on tariffs

• hiring freeze in the federal government—excluding defense
• rescission of 78 Biden era actions orders and memoranda
• withdrawal from Paris Climate Treaty
  Revoke
• revokes Biden Executive Order that set a target of 50% of new vehicle sales by 2030 as EVs

Nothing on tariffs, as reported Sunday afternoon US time:

• Leaks around Trump’s ‘day one’ executive orders have not mentioned tariffs at all

Which sent the USD dollar slumping:

• Wall Street Journal story triggered US dollar sell off (big time!)

I wonder how nazi salute guy (Musk) will take that revocation of the EV mandate:

This article was written by Eamonn Sheridan at www.forexlive.com.

Stanley Druckenmiller is on CNBC at the moment saying he doesn’t have a strong opinion on the direction of the market but with innovation surging he said it’s time to focus on individual stocks.

• The economy is ‘very interesting’
• We’re going from the most anti-business administration to the opposite
• CEO’s are somewhere between ‘relieved and giddy’
• The economy looks very, very strong at least for the next six months
• I would say the market is ‘complicated’ despite economy
• There is a push of a strong economy against bond yields that makes me not have a strong opinion on the market
• Earnings yield to bond yield is most-unattractive in 20 years

More:

• Says he’s still short Treasuries. Says it’s likely ‘7th inning’ in bond shorts
• Says fiscal situation is ‘horrendous’
• We’re not expecting lower inflation
• The US will need to turn to consumption tax (tariffs) or income taxes
• Private savings in the US are also far too low
• Thinks 10% range of tariffs limits retaliation
• Scott Bessent is ‘extremely capable’ and is in a great position, he understands the fiscal situation
• That said, he’s not in charge so I don’t know how it’s going to work out
• Deficit is a huge problem, we’re in a mess. Interest expense is an elephant
• We have a 2-3 year infrastructure build out on AI coming. I think we will have AGI by 2035 and the payoff down the line is huge. But valuations are high.
• Highlights that applications in AI, which are ‘limitless’ rather than those building it.
• Politicians aren’t willing to do the needed things for deficits. We need to bond market to send a signal
• I think the tariffs are coming despite the optimism in the WSJ, that should put upward pressure on the US dollar along with ‘animal spirits’. But I think we’re in the 7th inning of USD rally.

Despite his ‘seventh inning’ comments, he also said that you can make a lot of money in the final innings of a move. (For those who don’t know baseball, it’s a nine-inning game).

This article was written by Adam Button at www.forexlive.com.

Trump speaking:

• “We’re not going to do the wind thing”
• wind turbines are ugly
• reaffirms policy is to “drill baby drill”

Oil prices facing some headwind from the expected boost to supply. I posted on this yesterday to give y’all a head start on the week:

• Trump to declare a National Energy Emergency – will enable him to use new powers

This article was written by Eamonn Sheridan at www.forexlive.com.

Trade related memo falls short of implementing any solutions. Its going to be a long and hard road this one:

• draft Trump trade memo directs federal agencies to investigate and remedy persistent U.S. trade deficits that harm U.S. economy
• draft Trump trade memo seeks to address unfair trade practices and currency manipulation by foreign countries
• draft Trump trade memo seeks to ensure trade deals, including USMCA, prioritize American workers, farmers, and businesses

This article was written by Eamonn Sheridan at www.forexlive.com.

European Union finance ministers reached agreed on Monday to maintain a unified stance toward the new U.S. administration, emphasizing that strengthening the EU’s economic competitiveness is the best way to address potential transatlantic challenges, according to EU diplomats.

During an informal dinner, the 27 finance ministers also agreed that fostering deeper economic ties between the EU and the U.S. would be mutually beneficial, diplomats familiar with the discussions reported.

Additionally, the ministers acknowledged that maintaining low and stable energy prices is essential for Europe’s economic prosperity, noting that EU industries and consumers face significantly higher energy costs—double those in the U.S. and four times those in China.

Reducing energy prices was therefore seen as critical for ensuring Europe’s global competitiveness, diplomats said.

The International Monetary Fund (IMF), in a paper prepared for the meeting, suggested that further integration of the EU energy market and joint investment initiatives could help address this challenge.

“Most ministers agreed that deeper energy market integration would be advantageous,” an EU diplomat stated.

This article was written by Eamonn Sheridan at www.forexlive.com.

I posted yesterday on the Wall Street Journal story leaking details of Trump’s ‘day one’ agenda, noting that he wasn’t going to implement tariffs:

• Leaks around Trump’s ‘day one’ executive orders have not mentioned tariffs at all

While I urged caution, noting that Trump can be mercurial and volatile with policy announcements (that’s what’s Twitter is for after all!) I put a 75 – 80% probability that it’d be a ‘no tariff implemented’ day. That proved to be a good call. For traders, it meant a bid behind ‘risk’ and an offer for the USD.

And that’s what played out.

Here is the USD index since Monday morning my time (Sunday evening US time when the Journal carried the story).

ForexLive kicks off the week on Sunday afternoon US time, and its days like this that make it all worthwhile. I hope traders out there got some pips from this. Kudos to the WSJ for the report.

How Trump’s day played out – he blabbed about tariffs but did nothing, as we expected and foreshadowed:

• Trump to lay out trade vision but won’t impose tariffs yet – report
• Trump inauguration speech highlights tariffs. US dollar bounces
• Trump official confirms earlier report that he won’t impose Day 1 tariffs

This article was written by Eamonn Sheridan at www.forexlive.com.

The headline on this yesterday didn’t have any detail:

• Reports that a Tesla vehicle on autopilot has crashed into a retail store

More has emerged:

• A Tesla crashed into The Mellow SF plant store
• Elizabeth Creely, a Mission resident, was riding her bike west on 21st Street when she came upon the accident.

  Creely spoke to the driver of the Tesla who said she had her car on auto-pilot to make a right turn onto San Carlos and into her garage. The car, however, wasn’t executing the turn. When the driver went to disengage autopilot, she told Creely, she hit the gas pedal by mistake.

Here is the link to the info if you want more.

This article was written by Eamonn Sheridan at www.forexlive.com.

New Zealand Card Retail Sales – for purchases made in New Zealand on debit, credit and store cards.

-1.0% y/y in December 2024

• prior was -2.3

For the m/m, +2.0%

• prior 0% (zero)

***

Card spending data covers around 68% of core retail sales in NZ. Its used as the main retail sales indicator for the country.

This article was written by Eamonn Sheridan at www.forexlive.com.