Trump and the US Dollar

Share On Facebook
share on Linkedin

The U.S. dollar climbed over 1.5% versus the Yen right after the FBI stated that they will be sticking by the conclusions of the original probe in July. It was expected for the dollar to strengthen with Clinton’s victory and weaken with Trump’s. Trump has promised to tear up existing U.S. trade agreements and was seen upredictable by investors. A panic was expected in selling of dollar and buying ‘’safer’’ currincies in the short run whereas in the long run, the dollar was expected to rally due to Trump’s policies, including pledges to cut taxes and spend as much as $500 billion on infrastructure programs, which would cause inflation and eventually lead to higher U.S. Rates and bolster the dollar’s appeal.


On the other hand, Trump’s plan to attract American multinationals such as Microsoft Corp. and Apple Inc. to bring billions of offshore cash home would ultimately drive demand for the dollar. On the other hand, it is expected for higher levels of interest rates and economic growth due to his promise to expand fiscal policy through tax deductions.
Donald Trump’s inauguration speech did not really touch on specific econonic or trade policies and because of that, the decline of the U.S. dollar was modest compared to what was really expected.

Let’s look at some economic factors from 2016:

– Non-agricultural employment stayed just above 150K rally.
– The unemployment rate fell below 5%.
– The PCE (Personal Consumption Expenditures) rose 1.7% in a yearly basis.
– The core inflation was stabilised between 2.2-2.3 levels.
– The third quarter GDP revised up to 3.5% gains.
– Trump stated that he will increase the public spending for new infrastructure and that the US will enter a rapid recovery period.

What is being expected?:

– The public investment is expected to create new job vacancies and opportunities.
– After FED assessing the economic activity, the labor market and inflation, the members have agreed to raise the target range for the federal funds rate ½% to ¾ %.
– The FED’s increase in the interest rate may attract international capital flows into the country.
– The capital inflows from emerging markets to invest their current account surpluses will play an important role in lowering treasury yields and returns on other ‘’safe’’ U.S. assets.
– Donald Trump’s victory is still unclear whether it’s going to be a threat or beneficial to the U.S. Dollar in the medium-to long term.
– The dollar movements are expected to remain difficult to forecast due to uncertainty but it can be said that the U.S. Dollar will respond immediately to any challenges or new opportunities.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

Do you want to write for our Newspaper? Get in touch:

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20211208 04:31:19