Russell Sandiford
Reiwa-Capital.com
The risk appetite has swung and its not likely to turn back any time soon now that we have some resoundingly optimistic results from the latest round of US/China trade discussions.
Top 6 trade comments & highlights of the headlines from US President Trump:
- The agreement is a ‘big deal’
- China has agreed to make 40-50bln USD in AG good purchases.
- We are very close to ending trade war.
- Fed should cut rates despite this deal.
- Also agreed on currency and FX issues.
- Little doubt that we will be able to finalize this deal.
With the outcome still very much on a knife-edge ahead of the APEC leaders’ summit in mid-November the theme has been a reactive knee-jerk move mainly in risk-weighted assets SP500 futures, Gold and Risk FX such as the AUD.
Top 3 trades to play the Trade Optimism
No doubt US Equities will be a top way to play out market optimism, as well as Short Yen versus the USD, and GOLD.
Here are the top 3 in detail:
- USDJPY – Bullish even from 108.50 – Look for a move above 109 as safe-haven Yen rolls over.
- GOLD – Strongly bearish – Look for a reset lower to $1,460.
- SP500, I remain a buyer from 2,950 looking for a breakout to 3,000.
We have seen the optimism run wild before in US equities futures, and this round may be exactly more of the same, with the inverse trade on the table for Gold.
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