Forex Signals Brief for September 28th: Is it Time to Ride the Trump Trade Again?
Rowan Crosby • 3 min read
It seems to me that the stock market rally just won’t quit. Good news for those of you with mutual funds, but not so good for volatility. Yesterday the S&P 500 (SPX) continued to rally higher, while it was the lesser lights such as the Russell 2000 (RUT) that put on a big show charging up more than 1.9%.
The talk around is the US President Donald Trump's tax cuts are likely to pass. That’s good news for the US economy and one that markets liked. If you can remember back to when Trump won office, stock markets went on a huge rally for over a month and tax cuts were one of the major reasons.
The good mood around town is also a bad one for the safe-havens. Gold continues to fall away as do the forex pairs such as the CHF and JPY. But the good news is that we're getting great opportunities on the short side. However, as stocks rally we need to start asking the question, how far can they continue to run?
Top Economic Data
It’s a busy day on the economic front with quite a bit of second tier data around. Here some of the top tier data announcements to watch out for.
GBP – Bank of England's Carney to deliver opening remarks at the Bank of England's conference celebrating 20 years of independence, in London at 8:15 GMT.
USD – US GDP is due for release at 13:30 GMT with analysts predicting no change from the previous period. This is a top market mover for the USD so be careful holding trades into this.
S&P 500 – Still More to Go?
It feels a bit like a broken record but US equity markets continue to grind their way higher. While the more volatile markets like the Russell and Nasdaq have outperformed this week, the SPX still continues to push higher. Of all the equity indexes it looks to me like this one still has room to go.
SPX – 240 min Chart.
SPX – Trading Plan
I think we still have a little more wiggle room to the upside before we get truly overbought. I’ve been targeting the top of the uptrend for a while now which is around 2540 at this point in time. Until then I’m happy to ride the Trump Trade to the upside.
GBP/USD – Time for a Bounce?
Not so long ago the GBP was on fire. During our big week of Central Banks, the pound went on a rip and ended up above 1.3600. From that point on though, we weren’t able to maintain that momentum and we retraced back to current levels.
GBP/USD – 240 min Chart.
GBP/USD – Trading Plan
What I’m seeing from a technical perspective is that we’ve run into support at 134.00, as well as being at the bottom of a bullish flag. That to me gives us a good chance of a rally higher in the next day or two.
That said we are up against some USD headwinds. If the USD continues its march than it might be tough to get the follow through that we need. But any sign of a short-term retrace and I think the pound is set to outperform.
It’s a very interesting time in equity markets and one that’s providing plenty of opportunities. Good trading guys!