USD: Volatility here to stay The first day of Donald Trump’s presidency was a volatile one for FX markets. The dollar tumbled before the inauguration as markets got tipped off by media reports that Trump would not impose tariffs on day one. The large dollar long positioning into the event and potentially some thinner liquidity due to US holiday may have exacerbated the move. In the slew of day-one executive orders, Trump confirmed the establishment of the External Revenue Service tasked with collecting tariff and duties. Other executive orders declared ...

The dollar took a dive on Monday after U.S. President-elect Donald Trump was quoted as saying he will not impose trade tariffs straight after his inauguration, which is set to take place later in the session. Trump will issue a broad trade memo on Monday that stops short of imposing new tariffs on his first day in office, the Wall Street Journal reported on Monday. An official for the incoming administration confirmed the report. Market participants had been expecting Trump to announce trade tariffs via executive orders. Such a move ...

Trump’s win derailed the CNY recovery but CNY has fared relatively well since Donald Trump’s election victory last November unsurprisingly sent significant shockwaves through the market, setting up a strong dollar backdrop, with the ICE US Dollar Index up 4.4% from the election as of the time of writing. This has added to depreciation pressure on numerous emerging market currencies, with the Chinese yuan as no exception. Many investors viewed China as one of the main losers from a Trump return, with the 60% tariff scenario as the primary consideration. ...

USD: Looking out for executive orders The big day has finally arrived. Financial markets are on tenterhooks to see what executive orders newly elected US President Donald Trump will enact on his first day. There’s a lot of focus on immigration controls and declaring a national energy emergency to allow more US oil and gas production. FX markets are most interested in what he has to say about tariffs and what kind of pain the Oval Office plans to inflict on major trade partners. At last week’s nomination hearings, incoming ...

King Dollar, meet the Donald. After lording over most major currencies for the past three years, the greenback is likely to get another big boost from the protectionism and fiscal largesse of incoming U.S. President Donald Trump. It may catch markets and governments out. This year was supposed to mark the end of the dollar’s long bull run. After the greenback gained 15% against its developed world peers since January 2022, analysts predicted that a slowdown in the U.S. economy along with interest rate cuts would dethrone it. Not so ...

The dollar strengthened against the yen on Friday, but remained on track to end the week lower after a six-week winning streak, as investors await Donald Trump’s presidential inauguration and clarity on the course of the incoming administration’s policies. The yen was poised for its strongest weekly performance in over a month as expectations for a Bank of Japan rate hike next week grow, putting the dollar on the back foot. It climbed more than 1% against the dollar this week, reversing last week’s decline, and touched a one-month high ...

Having talked the talk about an interest rate increase next week, the Bank of Japan needs to walk the walk or risk a steep yen sell-off. The growing expectation of a BoJ rate hike on Jan. 24 inflated the yen this week, with Japan’s currency notching a new four-week high against the dollar on Friday, when 154.98 marked the EBS low for USD/JPY. Japan’s central bank is likely to raise rates next week barring any market shocks when U.S. President-elect Donald Trump takes office, according to five sources familiar with ...

USD: Inflation still a headache FX markets may enter holding mode today as the US data flow slows and some wait-and-see approach prevails ahead of Monday’s presidential inauguration. The perception at the end of a busy week in macro news is that the optimism around a month-on-month slowdown in core inflation is cautious at best. The inherently forward-looking markets are factoring in Trump’s inflationary policies from a starting point that is already significantly above the target. So, despite stretched positioning and short-term overvaluation, the dollar continues to dodge true catalysts ...

While “U.S. exceptionalism” has undoubtedly helped drive Wall Street’s record-busting returns in recent years, it should not be confused with isolationism. The fourth-quarter U.S. earnings season that gets underway in earnest this week is a reminder that American firms – magnificent as some may be – still operate in a global marketplace. Weak economies and lackluster demand abroad, combined with a robust dollar, could erode American corporate profitability, calling into question whether the U.S. is so exceptional after all. With the dollar appreciating broadly and rapidly, exchange rates will soon ...

Sterling is at risk of racking up a fourth consecutive month of losses versus the dollar and January could prove significant as long-term support levels come into view. January 2016 was the last time sterling had such a poor start to a year and that 489-point drop could be bettered this year if key downside levels are breached. GBP/USD has fallen below its monthly Ichimoku cloud top, 1.2288, and the 1.2018 base of the cloud provides a bear target. The low from October 2023 is just ahead at 1.2038. A ...

South Africa’s rand was little changed on Thursday, a day after a key U.S. inflation report boosted hopes of a less restrictive Federal Reserve policy this year. By 0725 GMT, the rand traded at 18.7625 against the dollar , near its previous close of 18.7575. U.S. core inflation slowed last month, while headline consumer prices showed no major surprises, boosting market bets that the Fed would reduce rates twice by the end of 2025, with the first reduction expected in June. However, markets have a wary eye on U.S. President-elect ...

Should the Bank of Japan raise the interest rate next week, it will not shock the yen as it did last year, because of the radically different way traders have positioned themselves ahead of the event. Instead of betting heavily on the yen dropping, a wager against the yen has only emerged this month and it is negligible. With the yen rallying slightly ahead of the Jan. 24 policy meeting, there is a strong chance that traders are gambling on the yen rising by the time of the event. Without ...

U.S. President-elect Donald Trump’s imminent return to the White House and fading hopes for aggressive interest rate cuts have driven the dollar to multi-year highs, and investors see this strength continuing, aided by the new administration’s pro-growth and inflationary policies. The dollar index DXY, which measures the greenback’s strength against six major currencies, has surged nearly 10% from its late-September lows to a more than two-year high. Much of these gains have occurred since Trump’s victory in the November election, as investors raced to prepare portfolios for the new administration’s ...

USD: Bessent should keep the strong dollar theme alive Global asset markets have enjoyed a positive 24 hours driven largely by the marginally sub-consensus US core CPI reading for December. US short-dated yields fell 10bp on the view that inflation is not getting any worse. However, sticky headline and core inflation near 3% YoY still cast doubt on the Fed’s ability to cut this year and just 36bp of Fed easing is priced for 2025. ING’s US economist, James Knightley, is starting to think that any easing now will be ...

South Africa’s rand strengthened on Wednesday, ahead of a key U.S. inflation report that could provide clues on the Federal Reserve’s interest rate path. At 0805 GMT, the rand traded at 18.8775 against the dollar , about 0.3% firmer than its previous close. Investors were awaiting the U.S. Consumer Price Index (CPI) report due later in the day to see if it supports the Fed’s cautious stance on rates. “Today’s US CPI data (is) expected to influence monetary policy and bond yields globally,” said Andre Cilliers, currency strategist at TreasuryONE. ...