The beauty of looking at the markets with a trader’s mindset is that you are happy to change your view if conditions change.
No need to go down with the ship. Just swap teams and go on your merry way.
I reckon my worst call of the last year on Closing Bell would have to be my view that the Aussie dollar was about to blast off after the first US interest rate cut.
It seemed like a no-brainer.
The US Fed had started their rate cutting cycle but inflation in Australia remained stubbornly high. So rates weren’t going to fall in Oz, and they could even rise.
Put two and two together and the Aussie dollar should spike higher.
But as you learn before long when you get involved in the markets, two and two often equals minus $5,000 in your account.
As Trumps odds of getting elected rose, the US dollar started to run. After the election the buying in the US dollar has gathered steam, and now it looks ready to break out above major resistance.
This is the major post-election event that investors need to understand so they can adjust their portfolio if necessary.
Gold and copper are already struggling under the pressure of the rising US dollar, and rising US bond interest rates.
Chinese stocks are also feeling the pinch as the looming tariff wars weigh on sentiment.
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).
But after my last call, you have to take that with a grain of salt!
Currencies can be particularly hard to predict, and I don’t often trade them as a result.
But the overall theme of a stronger US dollar on the back of Trumps America First policies is here to stay. Investors need to get prepared.
I listened to an interesting podcast during the week that had an economist, Stephen Miran, describing how the last time Trump imposed tariffs on China, trade wasn’t affected. That’s because the US dollar jumped as much as the tariffs.
In other words the US dollar price of things didn’t really change. So trade volumes didn’t change much.
In effect the Chinese paid for the tariffs through the weaker Yuan.
In today’s Closing Bell video I show you multi-decade charts of the US dollar and Australian dollar, now that a new trend is emerging.
Then I set out the key levels to watch in the Hang Seng as the selling pressure increases on Chinese stocks.
I finish off by showing you another three Australian stocks with solid US earnings exposure and impressive uptrends.
Be sure to check out how to invest using professional trading techniques by reading the 6 lessons I have learned over my trading journey, since starting on the Sydney Futures Exchange trading floor many years ago.
Be sure to check out how to invest using professional trading techniques by reading the 6 lessons I have learned over my trading journey, since starting on the Sydney Futures Exchange trading floor many years ago.
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,
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Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps
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