Fed Chairman Grinch

US Federal reserve Chairman Jerome Powell has become the Grinch, stealing the market’s Santa Rally.

Last week I predicted the Australian dollar would take a belting, and it fell sharply as expected.

On 16 November I said:

‘The Aussie dollar is looking particularly sick at this juncture. So like every self-respecting turncoat, I have jumped ship on my bullish Aussie dollar view and am now decidedly bearish.

‘There are some dominoes lined up beneath the current price level that could see the Aussie dollar cascade down 10% towards 60 US cents in the next three to six months (currently 64.5 cents).’

One month later, the Australian dollar has hit 62 cents and looks likely to fall further.

The US dollar index has moved above key resistance at 107.00, suggesting new targets I reveal in the Closing Bell video below.

Powell’s conversative approach to rate cuts has confirmed they will maintain higher levels next year. Trump’s pro-business/pro-America policies could spark a growth spurt that keeps inflation and interest rates at higher levels than market expectations.

The US 10-year bond yield jumped above 4.5% and looks likely to head higher. The impact on US stocks remains unclear, as growth projections for 2025 could support a higher market.

But Australian stocks face mounting pressure as Trumps inauguration approaches. The falling Aussie dollar may force international investors to withdraw investments.

There is rising fear that Trump’s policies towards China could kick them while they are down. Australia could suffer as a result.

Plenty in the press talk about a coming huge fall in energy and resource exports.

The Australian reports:

‘The value of Australia’s energy and resource exports will fall substantially over the next 18 months and a possible US-China trade war threatens to extend the pain, new government forecasts have shown in a prognosis that will intensify concerns about the state of the nation’s economy…

‘…Export projections released by the Office of the Chief Economist and Department of Industry and Resources show earnings are forecast to decline by about 10 per cent to $372bn in the 2024-25 financial year, down from $415bn a year earlier. Further falls in the following 12 months are expected, with export earnings forecast at $35lbn, a reduction of more than 5.5 per cent.’

Australia may be the unlucky country in 2025. That’s why I’ve focused you on some international opportunities…or Australian companies with US exposure.

In today’s Closing Bell I cover the reaction to Chairman Powell’s hawkish rate cut. I look at the surging US dollar and collapsing Australian dollar. I also give targets in each.

We’ll look at the bearish weekly momentum in the ASX 200 and explain why it looks like we will see lower prices ahead in the short-term.

Thank you for tuning into Closing Bell in 2024. I hope I have managed to convince you that reading the charts can help you on your way to becoming a consistently profitable investor.

I also hope you have benefited from a few of the calls I made throughout the year.

Be sure to read my white paper covering the key lessons you need to know to become a successful trader. And be sure to ‘like’ the video on YouTube if I have added some value to your day!

Merry Christmas and Happy New Year.

I’ve put together insights from my 30+ years of trading that will help you navigate Trumponomics.

I believe that the key to high returns without stress, is knowing you can survive any market conditions. To do that you need a risk management process that handles immense volatility.

I put this into action in my service Retirement Trader.

You can learn more about my approach by clicking here to get access to 30 years of trading knowledge.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps