Dollar Hit on Trump’s First Day – USD Down Over 1%
As expected, markets experienced significant moves yesterday as Donald Trump was sworn in as the 47th President of the United States, despite local markets being closed for a bank holiday. The dollar suffered a substantial hit, and stock futures surged as tariffs were not at the forefront of the President’s initial announcements, raising hopes that implementation may be slower or more limited. The dollar weakened against all major currencies, with the DXY losing 1.23% on the day. However, it remains volatile, as traders remain cautious about further updates in the coming sessions.
Oil prices declined after Trump announced plans to ‘fill up’ the US strategic energy reserve, with Brent down 1.05% to $79.93 and WTI off 1.27% to $76.89 per barrel. Gold closed the day up marginally by 0.23% at $2,708.23, trading within a relatively tight range. Nonetheless, traders expect more significant movements as the week progresses.
Dollar in Focus as New US Administration Takes Control
The dollar faced a notable decline in overnight trading as Donald Trump entered the White House without providing a conclusive update on proposed trade tariffs. FX traders had witnessed the dollar gain nearly 5% on the DXY since Trump and the Republicans secured a resounding electoral victory in November, with the new administration promising substantial tariffs on several overseas markets. Many expected the President to confirm his ‘hard tariff’ stance during proceedings yesterday, which would have led to further dollar strength. However, this has not yet occurred, and major currencies have experienced relief rallies as a result.
Trump to Move Markets in the Sessions Ahead
Traders are bracing for increased volatility across financial markets today as the new US administration begins implementing its policies. In addition to the geopolitical impact on US markets, which will open for the first time today under the new government, several key macroeconomic data releases are expected from other jurisdictions.
While there is little scheduled in the Asian time zone, attention will shift to UK markets with the European open, as key employment data is due. The Claimant Count is anticipated to rise by 10k, with Average Earnings expected to jump to 5.6%, while the Unemployment Rate is forecast to remain steady at 4.3%.
With the return of US traders to their desks at the New York open, the focus will remain firmly on updates from the new government. Although Canadian CPI data is due earlier in the day, tariff-related commentary is expected to dominate market movements for the CAD, as has already been observed.
