Monday continued the momentum of ‘Trump Trade 2.0’ though several markets are approaching critical levels, DBS’s Senior FX Strategist Philip Wee notes.

DXY nearing a full retracement

“The Dollar Index (DXY) appreciated from 103.4 to 105.5 since the November 5 US election, nearing a full retracement of its 3Q decline from 106.1. EUR/USD dropped below 1.07, closing 0.6% lower at 1.0650 overnight, but is near the year’s low of 1.06 reached in mid-April.”

“USD/CAD struggled to break above 1.3950 this month, with similar resistance for USD/JPY at 154. The S&P 500 Index rallied 5% after the election, hitting an all-time high at the psychological 6000 level. Bitcoin’s spectacular post-election surge from sub-70k is near a test – a trendline resistance level slightly above 90k.”

“In contrast, gold fell 4.4% this month, after a four-month rally, with profit-taking fuelled by concerns that Trump’s incoming policies could reverse the Fed’s easing cycle.”