Cautious Sentiment Ahead of Next Week’s Start

Cautious Sentiment Ahead of Next Week’s Start

Market Focus: Trump Inauguration Ceremony

• Date: Next Monday (20th)
• Key Highlights:
  1. Inaugural Address
     • Expected to outline broad policy directions on issues like environment, immigration, and education.
  2. Executive Orders
     • Multiple orders are expected on the first day, with specific attention on tariff policies.
     • Tariff Measures in Focus:
       • 25% tariff on Mexico and Canada.
       • Up to 60% tariff on China.
       • Universal tariffs of 10–20% applied globally.

These policies could lead to:

• USD buying due to rising U.S. inflation expectations.
• Selling of commodity currencies due to concerns over reduced global trade.

Today’s Market Outlook

• Ahead of Trump’s inauguration, a cautious tone is expected.
• Position adjustments and unwinding are likely to dominate, with limited appetite for aggressive new positions.
• Given recent USD selling, today may see a preference for USD buying.

Currency Pair Outlook

1. USD/JPY
   • Expected Range: Recovery attempts targeting the 156 level.
   • Context: Temporary support from USD-buying sentiment.
2. EUR/USD
   • Expected Range: Consolidation around 1.03.
   • Focus: Further USD strength may drive the pair to test 1.0250.

Summary

• With markets awaiting Trump’s inauguration and policy announcements, a wait-and-see approach is likely to dominate today.
• While position adjustments will be the main activity, USD-buying may slightly prevail.
• Significant market moves are expected to commence next Monday, emphasizing the need for cautious position management.

Note: Trump administration policies could have profound effects on major currency pairs. Stay alert and maintain flexibility to adapt to unfolding developments.