President Donald J. Trump has been in office since January 20, 2017, and already the media is out for blood. Left-wing media networks in CNN and NBC are seeking the proverbial smoking gun after Trump’s national security advisor Gen. Flynn was relieved of his position. Whether the media will be able to link Trump to the controversy remains to be seen. Politics aside, Trump’s brief tenure in the Oval Office has dovetailed with unprecedented economic gains on Wall Street. The Dow Jones Industrial Average is up 4.02% over the past 1 month, and trading at 20,624.05. The S&P 500 index is up 3.52% over the same period, and is now trading at 2,351.16. The all-important tech index – the Nasdaq Composite Index is up 5.10% over the past 1 month and is trading at 5,838.58.
In all instances, the 1-year performance of major US indices has shown an appreciation of over 20%, averaging around 26%. This is phenomenal, given the current state of global economic affairs, what with geopolitical uncertainty in the Middle East, upcoming elections across Europe and the Brexit referendum. We have seen treasuries extending their performance, even after the GBP faltered on Friday. Part of the reason for the strong rally on the S&P 500 index was the performance of Kraft Heinz – the food manufacturer which rose by 10%. It is against this backdrop that the week’s top 4 financial assets are discussed.
Trading Opportunity #1 – USD/JPY pair weakens
The USD/JPY pair is currently trading at 112.8360, down 0.3779% or 0.4280 JPY. The greenback briefly broke higher against the JPY, rising towards the 115 level during the week, but subsequently retreated to end markedly lower against the yen. The all-important US dollar index – a broad measure of the strength of the greenback – traded at 100.90, after closing at 100.50 on Thursday, 16 February 2017. Of course, short-term weakness in the USD/JPY pair should not blur the picture for the long-term trend. The Fed is slated to increase interest rates at least 3 times in 2017, and this will inevitably reverse the short-term weakness we are seeing in the pair. The US economy is approaching the full employment level, and the Fed is preparing consumers for higher borrowing costs.
