The Week of February 17, 2025

During the upcoming week, we have a couple of things to pay close attention to. The first thing, of course, will be the fact that both Australia and New Zealand are likely to cut rates, but we also have President’s Day in the United States on Monday, so that will cause some liquidity issues. Furthermore, we need to pay attention to the Donald Trump and Elon Musk interview on Tuesday, which could cause headlines as traders are still focusing on the latest drama coming out of the President’s mouth.


It'll be interesting to see what he has to say, and quite frankly, I think that will probably continue to be a major issue for the next couple of months, as traders will have to recalibrate to the Trump era, which is normally highlighted by volatility. Furthermore, it's probably worth noting that we might have a little bit of a "wiggle in the economy" in the United States, as it looks like inflation might drop slightly before re-accelerating. Because of this, we could have a situation where a lot of people lose a lot of money in a very short amount of time.

Australia and New Zealand

Both Australia and New Zealand have interest rate decisions this week. Australia will kick things off early on Tuesday morning, with an expected move from 4.35% down to 4.10% at this meeting. However, most of what traders are going to be paying attention to will be the press conference and any signs that those cuts could be deeper. Naturally, a 50 basis point cut by Australia would have a significant negative impact on the Australian dollar. Unless it is a hawkish cut, I suspect that the Australian dollar will continue to be weak from a longer-term perspective.

In my opinion, there is limited potential for growth in this pair. The market will persist in interpreting Australia through the lens of China, and it's important to note that the decline in Chinese 10-year yields indicates a persistent lack of confidence in any potential Chinese recovery.

Over in New Zealand, it is expected that the RBNZ will cut interest rates by 50 basis points early Wednesday. Currently, I believe that the recent surge in the New Zealand dollar is primarily due to profit-taking, and it's likely that the Kiwi dollar will experience another downturn soon. That being said, this is much like the Australian situation, where it will probably come down to the press conference more than anything else.

With both the Australian dollar and the New Zealand dollar, I expect to see exhaustion sometime fairly early in the week, which should bring in more shorting of the AUD/USD and the NZD/USD pairs.

Some other things to watch

There are other things to watch during the week, naturally. Besides the obvious chaos that Donald Trump could cause with a few words during a press conference, we have the FOMC Meeting Minutes on Wednesday, as well as CPI coming out of the United Kingdom that very same day. The weekly Unemployment Claims number in America on Thursday is probably a minor event, unless, of course, it comes out much weaker or stronger than the expected 214,000. Keep in mind, inflation is still a very real problem in the United States, so more people working causes more of the same issue.

Friday could be a very interesting day as we get Flash Manufacturing and Service PMI numbers coming out of France, Germany, and the whole of the European Union, the United Kingdom, and the United States. In other words, it will be a huge day to discern how inflation is performing around the world.

Over the weekend, Federal Reserve Governor Lorie Logan expressed that the Federal Reserve should exercise caution when setting rates, even in the event of improved inflation data. This is obviously a bit of a hawkish tone, despite the fact that there is a lot of noise out there when it comes to currency movements and what people believe is actually happening. Nonetheless, I do believe that we still will see more of the USD positive bias, although we are in the midst of a correction.

Trump and the “Golden Age of America.”

I get a lot of correspondence from foreign traders who clearly don’t understand what is going on in the US. In fact, it is probably the biggest issue I deal with at the moment. I will try to make this understandable because this is going to greatly influence how investing and trading is going to play out in the next few years.

Trump believes he has a mandate. He will push as hard as humanly possible. In his first term, he had a lot of pushback from the permanent deep state. (Those who live off the government teat.) At this point, he is on the warpath, and quite frankly, a majority of Americans are not only good with this but would turn on him in a second if he veers off that path. It was just announced that 15,000 IRS agents are about to be fired this week.

He will renegotiate with almost all of the trade partners of the US and will get better deals. This will lead to more economic strength in the US than we have seen in years, if not decades. This is possibly the death of the welfare state before it is all said and done. The thing is, he is dead serious about this. This is how the next four years are going to be. While many of my European and Canadian friends don’t like this, they are going to live it. You can either trade what it is that you want to happen or what is happening. Your choice. This isn’t even a statement of what I think is correct, but I recognize what is happening. I cannot urge you enough to do the same.

The “Golden Age of America” is going to occur. The entire country feels a lot like 1979/1980. People's confidence is skyrocketing, and they are reverting to common sense. One of the biggest reasons for America’s comeback is that it involves several people. For those of you who aren’t paying attention or just don’t know, there is an entire group of people putting “America first.” If Trump irritates you, wait until you get a load of JD Vance, the Vice President, and probably the next President. He’s like Trump with an Ivy League education and combat experience. It is early, but there is a very real chance that the Democrats don’t take power for 12 years or more. For those of you who aren’t sure who he is, JD is the guy that just told leaders in Brussels how they are squashing freedom of speech, and America was going to lead the way in AI. He basically said, “You can come along or be left behind.”

Trump’s cabinet picks are a stark change from previous picks for these positions. The US military is finally going to be likely to leave most of the world alone, which is something everyone wanted, in theory. The Ukraine war is all but over, as Trump and Americans have no appetite for funding a country that just a few years ago was known as one of the most corrupt in that part of the world. I suspect that if and when the military is used, it will be in a much more overwhelming manner than we have seen since the 1991 Gulf War. I am also almost certain there will be targeted attacks on cartels in Mexico as well.

Vivek Ramaswamy filed paperwork to run for Governor of Ohio. He is the new kind of conservative that is rapidly gaining popularity in the USA. Vivek will be the next governor of the 6th largest population in the United States. He is one of many “new conservatives” that are going to reshape America.

Quite frankly, things are changing faster than it is possible to keep up with. However, they all have one theme: “America First.”

I continue to accumulate in this boring market

I think Bitcoin will continue to be ‘meh’ in the near term, as there just isn’t any real fundamental reason for it to go anywhere. Recently, we have had both the Wall Street ETF and the election of Donald Trump to the White House. However, it is still early for the Trump administration, and despite the cries of Bitcoin Bros., any pro-crypto legislation isn’t in the top list of priorities for this new administration.

This is not to suggest that it won’t be in the conversation, but it will be a while from now. Trump has a lot of things on his list, and he is just getting started. Its going to take time. Because of this, I will continue to buy a little bit on the dips in the BTC market, simply accumulating. I am not going to get stressed about it.

Ok, everyone…that’s enough for now.

Trade well, and be aware volatility is here to stay for a while.

Chris