The Trump Effect
Now that the election is
over and Trump will be president in 15 days, we can focus on the implications
of a Trump presidency. Donald Trump aims to shake up the US political
establishment, which could potentially have a large effect on market volatility.
2017, the key economic policies set forth by Trump will have an impact on
various key financial markets such as US Dollar, Euro, Yen, Pound and other
important currencies as well as stocks, commodities and bond markets in the
event of victory.
has repeatedly stated in public his position that the US Federal Reserve and Fed
Chair Janet Yellen have been politically-motivated in keeping interest rates
low. He has essentially accused the Fed of attempting to create false
appearances of a healthy economy and stock market to embellish the Obama
Administration. Trump has deemed the rising US equity markets as a “false stock
market” that has been propped up by an overly accommodative Fed. This stance
against what he sees as politically-driven dovishness provides a hint that if
Trump gains the highest office in the land, he may be keen on instituting a
more hawkish Fed. In that scenario, the possibility of higher interest rates
going forward could lead to a stronger US dollar. In addition, Trump’s rhetoric
on international trade issues has deemed his policy position as heavily protectionist.
At least initially, this stance could lead to a further boost for the USD,
especially against emerging market currencies like the Mexican peso and Chinese
yuan." by James Chen