Show less
Morning Call: Softer dollar boosts commodities, stocks
21 September 2018 at 7:40 GMT
Morning Call: Markets stabilise as trade tensions ease
20 September 2018 at 8:28 GMT
Morning Call: Chinese shares surge as trade war rages on
19 September 2018 at 8:36 GMT
Today’s FX chart analysis - video
John J Hardy
18 September 2018 at 10:28 GMT
Morning Call: Trump hits China with tariff plan
18 September 2018 at 7:29 GMT
The week ahead in macro
Kay Van-Petersen
17 September 2018 at 8:11 GMT
Macro Monday week 38: Keep Global Macro and Carry On
Kay Van-Petersen
17 September 2018 at 8:02 GMT
Morning Call: US yield curve lifts, boosting dollar
17 September 2018 at 7:23 GMT
Technical analysis webinar – A view of the market: Larsson
Kim Cramer Larsson
12 September 2018 at 14:44 GMT
Morning Call: Chinese shares fall further
11 September 2018 at 8:36 GMT
Morning Call: USD, SEK in focus
10 September 2018 at 7:49 GMT
The week ahead in macro
Kay Van-Petersen
10 September 2018 at 7:37 GMT
Morning Call: Is Japan next?
07 September 2018 at 7:35 GMT
Video / 14 September 2017 at 8:11 GMT

From the Floor: Trump trade could be recovering — #SaxoStrats

  • Some signs have emerged that the 'Trump trade' could be recovering
  • Firmer USD is one sign of that optimism, softer gold is another
  • Bank of England policymakers meet amid low expectations
  • US CPI will be closely examined before next week's FOMC
  • Oil supported as IEA joined Opec in sounding upbeat about supply/demand outlook
  • Gold testing support as stronger USD, stocks and yields sapping demand 
  • European equities seen fading after impressive recent gains
Saxo Strats banner
By John Acher

Financial markets are showing some signs that the "Trump trade" could be recovering, including some slippage in the price of safe-haven gold, as investors look for potential new opportunities if the Trump administration's plans for tax cuts, infrastructure spending and capital repatriation get back on the agenda.

The "Trump trade" is the name given to the bump in markets after the surprise November 2016 election of Donald Trump as US president. It was driven by hopes in the financial markets for tax cuts and bonanza in infrastructure outlays, which all but vanished once the Trump administration proved incapable of passing key legislation.

One sign of the incipient optimism about a revival of the Trump trade is the somewhat firmer US dollar, as seen in EURUSD correcting a bit lower.

“We have seen a bit of dollar firming. You could say that this is simply a consolidation after a brutal run lower,” says Hardy. (Read also Hardy's latest FX Update here on TradingFloor.)

“But there is a lot on the fundamental front going on after a disastrous few weeks of the US president’s behaviour and thoughts of impeachment etcetera,” says Hardy. “He seems to have turned some kind of corner, and this deal-making with the Democrats is a rather new angle.”

“It suggests that we could see at least a shadolw of the Trump trade returning, tax reform and so forth, as he appears willing to deal with the Democrats, and this is an interesting turn and unexpected,” Hardy says.  

Trump struck a deal with the Democrats last week on a short-term plan to fund the government and raise its borrowing limit this month, which came as a surprise even to congressional Republicans.

"So this could provide some relief for some time for the dollar if we see it developing in the weeks to come," Hardy says.

The firmer dollar and emerging optimism about the Trump trade are affecting other assets.

"Gold is where the Trump trade is coming back,” says Saxo Bank's head of commodities strategy Ole Hansen.

Gold prices have traced a bit lower, and $1,300/oz is the key level to watch out for, Hansen says.

BoE meets

The Bank of England’s policymakers meet on Thursday, with their announcement due at 1100 GMT.

The August BoE statement said that the bank is willing ignore some high and uncomfortable inflation for now.

The BoE is going to reassess things after the October economic data, which won’t even be available until November, says Hardy.

“I have my questions whether the market’s recent enthusiasm for buying sterling – the squeeze here – is going to find encouragement in anything they say,” says Hardy. “But, of course, if they do say something that shifts or underlines or even encourages the further upgrade of the rate view that could be more supportive for sterling – I am just totally sceptical.”

GBPUSD has regained local highs above the previous 1.32-plus area that was rejected.
“I suspect that we will remain rangebound, and if we do see upside, I think it will fall short of the 1.35 area,” Hardy says.

GBPUSD up at local highs
Source: Saxo Bank 

August CPI data is due from the US today, and will be closely examined as input for next week’s (September 20) Federal Open Market Committee meeting.

“Everyone is very much in deflation mode, so anything to the upside is probably the bigger surprise scenario,” Hardy says.

Stocks seen stalling

“Equities will likely fade today. We have seen some impressive gains,” says Saxo Bank's equities strategy chief Peter Garnry, adding that he finds it puzzling that the strong euro has not had a deeper effect yet on European share prices.

The 12,500 level in Germany's Dax is a critical level and a "potential attacking angle" for traders, Garnry says.

Dax index at critical level
Dax index
Source: Bloomberg

"Watch the financials, they could be the driver of a slip in equities," says Garnry, noting that reinsurer Munich Re said that hurricanes Harvey and Irma may wipe out third-quarter net income. 

Oil prices got a lift from upbeat messages about the supply-and-demand outlook from the International Energy Agency and Opec this week.

The overhang of oil supply after disruptions is being offset by robust and rising refinery demand (on raised margins) and rising second-half demand growth, says Hansen.

WTI crude oil is now challenging downtrend from February ahead of the August peak at $50.50/barrel, Hansen says.

White House
 Is Donald Trump getting a grip? Photo: Shutterstock

John Acher is a consulting editor at TradingFloor 


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail