This Week's Market Outlook: Dollar Strengthens Amid Trump Trade
This week, the focus has been on the policies of U.S. President-elect Trump. His proposals for tariffs, domestic tax cuts, and expansionary fiscal policies have raised market attention, and the "Triple Red" scenario, with the Republican Party controlling both the government and Congress, enhances the likelihood of these policies being implemented. This has led to higher inflation expectations, rising U.S. bond yields, and strengthening of the U.S. dollar. The market is largely driven by the "Trump trade" at this stage.
Additionally, yesterday’s speech by Fed Chairman Powell, in which he expressed caution towards rate cuts, further supported the bullish dollar trend.
Global Impact and Factors Supporting Dollar Strength
There is growing concern over the impact of Trump’s policies on global economies, especially trade partners. This has put selling pressure on currencies like the Chinese yuan, Thai baht, and Mexican peso. In Europe, the German central bank president pointed out that Trump's policies could reduce GDP by about 1%, contributing to a decline in the euro-dollar exchange rate, which indirectly supports the dollar’s strength.
Key Economic Indicators Today: Focus on U.S. Retail Sales
In today’s overseas market, the following U.S. economic indicators will be released:
- New York Fed Manufacturing Index (November)
- Retail Sales (October)
Expected: +0.3% (previous: +0.5%) Excluding automobiles, expected: +0.3% (previous: +0.7%) - Import Price Index (October)
- Industrial Production Index (October)
Expected: -0.4% (previous: -0.3%) Capacity Utilization expected: 77.1% (previous: 77.5%) - Business Inventories (September)
The retail sales data will be particularly important as it measures the strength of U.S. consumption. On the production side, attention will also be given to the industrial production index and capacity utilization. While consumption is expected to remain strong, production is likely to show some weakness. How the market reacts to these figures will be key.
European and Central Bank Officials' Speeches
During European trading hours, the European Commission will release its economic outlook. Additionally, several key central bank officials are scheduled to speak during U.S. trading hours:
- Goolsbee, Chicago Fed President
- Panetta, Bank of Italy President
- Collins, Boston Fed President
- Lane, ECB Chief Economist
- Cipollone, ECB Board Member
- Williams, New York Fed President
Their remarks may cause short-term market fluctuations.
Market Sentiment and Trading Strategy
The flow of dollar buying continues, but as the week progresses, there is speculation that adjustments could occur after the series of economic events.
- USD/JPY: I entered a sell position expecting a correction, but it was stopped out due to timing.
- Cryptocurrency Market: After the correction phase, I expect buying to dominate today.
Key Focus Today
The major focus is on U.S. Retail Sales for October, set to be released at 22:30. I will monitor market reactions to this release, especially in relation to the movement of the U.S. dollar.
