Dollar Weakens as Trump Effect Sours

The dollar weakened across the board on late Friday and today morning as well as more and more of Trump’s policies are revealed and the markets and the people in general, including many in America, do not like it. The latest policy change was to restrict the immigration of a lot of people from a specific set of countries, Muslim countries especially, and this has led to the view that he seems to be targeting the Muslims on the basis of their religion. Though this change in rules has been overturned by court rulings across the country but it does show what is on the mind of him and his team and this is clearly against normal convention. His next focus could be on trade agreements between the US and other countries and this could affect the way trade is done with the US atleast over the next 4 years.

All this has caused serious concern and uncertainty in the markets and has led to a dumping of the dollar. It is a holiday in China on account of the New Year and so the reaction has been a bit muted so far. It remains to be seen what the actual and full reaction is going to be when the London and NY sessions open. What it has done is that it has taken away the focus from the Fed for now as the markets are focussing fully on administrative and policy changes brought about by the new team. We have the FOMC statement and rate later in the week and the employment report from the US towards the end of the week but all this has been forgotten as the market has turned its attention to the policy changes made by the new team and the dollar is being priced based on this uncertainty.

Looking ahead to today, there is no major economic news from any part of the world as we enter into the month end stage where the economic news is generally very less. Traders have to be careful this week as a lot of volatility is guaranteed in all the pairs.

 
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