Trump and the Dollar – Here’s the latest

Donald John Trump’s inauguration is now a thing of the past. He has been sworn in as the 45th President of America and as part of his inauguration speech, he said that American need to think big and dream even bigger, adding that America will start winning again, winning like never before.

Last year saw a lot of uncertainties. The markets are undecided what Trump’s policies are. They’re uncertain about how they are going to affect the dollar as well. Not only that, there is still so much that is uncertain about UK’s departure from the European Union and its effect on the U.K. economy and currency.

Some analysts predicted that the dollar would equal the euro, but the euro is battling with its own problems. Uncertainty with elections in Eurozone countries like Germany and France also have economic implications on the euro.

The Dollar Sensitive to Speech

With just days to go before the inauguration, the dollar had stabilised, seeing signs of this when on Friday, USD/JPY avoided losses for the first time in 5 trading days. On Friday, the day of Trump’s inauguration, US stocks rose with Treasury yields, with investors waiting for Donald Trump’s presidential inauguration to take place later in the day.

In recent weeks the dollar had already lost some of its momentum and was off 0.03% against 6 of the major currencies. There has also been a break in the post-election market rally over insecurity about how Trump will carry out his campaign promises.

Investors were waiting to see what the content and style would be of Trump’s inauguration speech, believing that the more typically presidential the speed would be, the better the outcome for markets.

The dollar, which had appreciated after the November presidential election, had been drifting lower over the past weeks. The dollar is always sensitive to comments made by Trump and his cabinet. For example, after Trumps’ Treasury secretary, Steve Mnuchin said that the United States prefers a strong dollar long term the dollar strengthened.

The dollar edged down on Friday as investors were looking to Trump’s first speech as president to highlight his plans for tax cuts and fiscal spending. On inauguration Day –

  • EUR/USD – slips down to 1.0637
  • GBP/USD trades under 1.23 after a turbulent week.
  • USD/JPY is trading above 115. Volatility is quite high in dollar/yen.

Up, Down or Sideways

Even after Trump’s inauguration, forecasting what the dollar will do in 2017 is a function of the longer term chart pattern. The dollar can go up or down or even sideways. There is the possibility that the U.S. dollar will trend higher in 2017. Intermarket dynamics could push the dollar higher driven by rising yields.

A new trader can’t possibly understand how the Dollar and currencies are influenced by world events. That is why it’s important to choose a broker whose trading platform is suitable for the analysis you want to do.

Before you enter any market, you’ll need to have an idea of how you will make decisions to execute your trades. Many new traders become perplexed because of all the conflicting information occurring when you look at charts in different time frames. They don’t want to start trading immediately with real money right away either.

Looking out for Key Economic Announcements

They want to practice and when they have a winning strategy, they want to trade live. Markets provides new and seasoned traders with the ultimate trading experience. They’re an FCA-regulated broker, adhering to strict regulatory requirements. No matter what your level of trading experience is, excellent education resources and advice will help you understand the movements of the dollar as you make the most of an award-winning trading platform.

Conflicting Views of the Moody Dollar

There’s a lot of talk now that Donald Trump is president, and there are conflicting views as to whether his presidency will be seen as a threat or seen as beneficial to the dollar. Nobody is able to predict how the U.S. dollar will behave in the long run. The markets are dealing with a great deal of uncertainty, and it is expected that the movement of the dollar will be difficult to forecast. One thing is sure the Dollar is a sensitive currency and will respond immediately to any new challenges or even opportunities to the U.S. economy.

 


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