Will Trump make America great again? Traders seem to disagree

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12 January 2017

Written by
Matthew Ryan

Senior Market Analyst at Ebury. Providing expert currency analysis so small and mid-sized businesses can effectively navigate international markets.

Yesterday’s awaited press conference from the president-elect kept markets on their feet last night.

T
he Mexican peso lost 0.7% during London trading. As Donald Trump was speaking, the Mexican currency hit all-time low as USD/MXN surged to 22.0. Euro dollar showed a similar trend. However, after falling to its lowest position in a week during Trump’s speech it recovered all of its losses afterward.

As expected, Donald Trump focused his news conference on promises of bringing jobs back to the US. He also separated himself from his business activity. Trump however provided no details on either fiscal stimulus, infrastructure spending or protectionist policies, so traders sent the dollar down in the aftermath of the conference.

Major currencies in detail

GBP

Sterling ended Wednesday’s London session 0.5% lower against the US Dollar, however, recovered all of its losses and surged after the closing of European markets.

Yesterday session was quite mixed for the Pound. The currency held its ground against the Euro and was rather calm versus the Greenback during the first hours of Wednesday session, however it sold off sharply in the run up to Trump’s conference. After the conference started, Sterling started gaining on disappointed hopes for a more balanced tone and more clarification on his taxation and spending proposals.

Wednesday’s macroeconomic data was fairly positive – manufacturing production for November rose by 1.3%, much faster than economists expected. The UK’s trade balance proved to be more disappointing. The difference between exports and imports increased to -12.6 billion from -9.98 billion.

Yesterday’s comments by Mark Carney, the President of Bank of England, didn’t move the Pound. Carney reiterated that the “Bank identified the risks correctly” and he agreed with the comparison of HSBC’s chairman Douglas Flint, in which he referred to the City of London as the ‘Jenga tower’ to show how unpredictable the effects of Brexit might be. Also, importantly, he said that the risk for continental Europe in his assessment is higher than the risk for the UK.

In the absence of important publications from the UK the focus today will be on developments elsewhere.

EUR

The Euro finished Wednesday’s session 0.5% lower against the US Dollar but recovered all of its losses and appreciated against the greenback after the closing of European markets.

In the absence of any important news the attention of Euro traders focused strictly on Trump’s conference. The Euro US Dollar trade tracked almost exactly Cable throughout the day,

Today we await the publication of Industrial Production data from the Eurozone and the critical minutes of monetary policy meeting from the European Central Bank.

USD

The US Dollar Index rose higher by 0.6% on Wednesday, however lost all of its gains after Donald Trump’s press conference.

Expectations for the Donald’s Trump press conference drove all other news into the background yesterday. The conference was short on policy details, however, investors will have to wait further for clarification on his economic plans

Today the important figure to watch is the weekly jobless claims. A series of speeches from FOMC officials might also move markets.

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