The Dollar is trading higher against almost every currency globally this week, as markets brace for a Trump presidency and Republican clean sweep in Congress. For now, of course, nothing changes. President Biden will remain in the top job until early next year, and we will have to wait until 20th January 2025 for Trump’s inauguration.
Yet, we still see room for fresh upside in the dollar between now and then. So far, we would perhaps argue that the moves in the FX market have been somewhat contained relative to expectations from some quarters, and it may take a few days for markets to correctly position themselves for Trump 2.0, which may present room for some fresh USD upside.
In our view, the main adjustment in market bets will centre around Federal Reserve rates. Tonight’s Fed meeting is probably unlikely to rock the boat too much. We expect the FOMC to deliver a 25bp cut. Powell may touch on the election, but we do not expect members to draw too many conclusions just yet. This could mean a rather neutral stance that neither confirms nor denies expectations for another rate reduction in December.
The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.
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Outlook for the markets under Trump 2.0
On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.
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