Recession or New Records
Recession or New Records

Strong US Dollar, Trump and Fed Policy Lead to Recession or New Records in 2017?

4 months agoByYaki Kellmer

Donald Trump believe in the American economy and markets quickly concluded that if Trump would implement his policy, the result will be a trade-in of ‘buy stocks and sell bonds’. The instinct outcome of planning infrastructure projects propels stocks market and might lead to inflation, hence, rate hike probability increases.
Indeed, we saw a really impressive surge in stocks – the big question is already embodied – whether this trend will continue in 2017?

Dow Jones Trend since Trump's victory
Dow Jones Trend since Trump’s victory

There are a few risk factors that we should give them attention:

Presidential elections in France on April 23 indicate extreme right bloc and calls for a referendum of leaving the European Union.

Italy: Party of Five Star comedian Beppe Grillo quickly comes to power in elections and calls for a referendum on re-launching the Italian economy.

UK: negotiations with the EU of BREXIT go wrong. The target is at the end of March 2017, with EU aim to conclude by End-Oct 2018. Additionally, local Government Election in May 2017 might effect the British economy.

Germany: Federal election, Sep 2017.

China trade war – Trump has been piped a thing or two about China’s currency manipulation, the situation is that he wants to impose tariffs on imports from China.

The United States first budget policy will likely approve another short-term spending bill until the end of 2017 fiscal year in Sep, and the real and full-blown budget will be for 2018 fiscal year.

Trump raises doubts about the commitments of the United States throughout the world, ISIS exploits of US disengagement from the world, and strengthened interest rate hikes in 2017. The Fed is now penciling in +75bps hikes in 2017, up from +50bps indicated at the 20-21 Sep 2016 FOMC meeting, but maintained the projected +75bps hikes for 2018 and cut the forecast for 2019 to +75bps from +100bps previously.

US Interest Rate hike probability
US Interest Rate hike probability

As for currencies, US Dollar is expected to strengthen at the expense of other major and regional currencies:

Currencies Forecast
Currencies Forecast

with interest rate hikes, there is a need for U.S. economic recovery to begin exerting spillover effects that accelerate exports from emerging countries. That clear-cut economic recoveries are seen in emerging countries as well. However, in light of the sustained weakness of emerging countries currencies that occurred since the emergence of the upcoming Trump’s presidency, it appears that there are not so many forex markets participants who believe in that scenario.

Answers will be given later in the year when Trump will be sitting on the presidential chair.

Technical Analysis

Let’s focus on Dow Jones which during 2016 – reached new heights. The latest move was based on expectations, not on facts – buy the rumors, sell the facts.

I predict market correction to hit the markets, whether after January’s Trump’s inauguration or alternatively in March.

The amendment process could occur in two directions: The first option for a correction of 13-17% of the index value, a second option reflects more severe correction, of 20-30% of markets value.

Dow Jones Price Correction
Dow Jones Price Correction

From the technical side we can see few interesting points, step up could be at 20,300 points +_ or even further to 21,700 points +_


Financial markets reacted quite violently to Donald Trump – before and after his victory. The true test of economy, as for US  and global economy, starts on January 20.

More News

North Korea’s Defiance of Trump Pushes Gold to Forefront

Gold is likely to be in focus this week after taking a backseat last week to the French elections, central bank meetings, and U.S. policy announcements. Pushing it back to the forefront will be the possibility of escalating military activity in North Korea based on events over the week-end. Demand for the safe-haven metal fell … Continue reading North Korea’s Defiance of Trump Pushes Gold to Forefront

4 Things You Need to Know Before the Market Opens

The French elections pushed global markets to record highs and postponed investors’ concerns for another week. The Euro climbed versus the US dollar after a long time of consolidation as Emmanuel Macron’s victory in the first round put at ease the European political uncertainty. Safe haven assets prices also dropped, and currently the markets major concern … Continue reading 4 Things You Need to Know Before the Market Opens

Stockpair - Best Customer Support Service

Interview with Awarded Broker – Stockpair

Below is an interview with the ‘Best Customer Support Service 2016‘ awarded broker – Stockpair. Stockpair Review: “Stockpair is a binary options broker that specializes in offering retail financial traders a fuss free way to trade the financial markets. The unique thing about Stockpair is the fact that they specialize in pair options. In fact, … Continue reading Interview with Awarded Broker – Stockpair

Kiwi Plunges on Trump Trade Policy Concerns

The New Zealand Dollar also fell under pressure despite the rise in demand for risky assets. It tumbled to its lowest level of the year in reaction to concerns over the Trump Administration’s trade policy. The NZD/USD ended the week at .6859, down 0.0168 or -2.40%. New Zealand Dollar traders reacted negatively to the news … Continue reading Kiwi Plunges on Trump Trade Policy Concerns

U.S. GDP Comes in Below Expectations at 0.7 Percent

The U.S. economy sputtered in the first quarter of Donald Trump’s presidency, growing at the slowest pace in three years while serving as a reminder of the fragility of the nation’s economy. According to the Commerce Department, U.S. Gross Domestic Product grew at a 0.7% annual rate in the first quarter from the preceding three … Continue reading U.S. GDP Comes in Below Expectations at 0.7 Percent

Euro Jumps on Surprise EU Inflation Figures

European stock markets are mixed, with the FTSE 100 underperforming following weaker than expected Q1 GDP numbers which will give the BoE some room before having to tighten rates. Eurozone markets managed to stabilized and are posting modest gains. It is the DAX that is underperforming flat on the day, while MIB and IBEX are … Continue reading Euro Jumps on Surprise EU Inflation Figures

Expand Your Knowledge

How Does a Country’s Gold Reserve Affect its Economy?

Last month I watched one of James Bond’s movies called ‘Golden Finger’, which was produced in 1964. The story was about a villain who wanted to contaminate the US gold reserve in Fort Knox, his notion was to save gold bullions that will eventually multiply its price. As I was watching this movie, I wondered about the … Continue reading How Does a Country’s Gold Reserve Affect its Economy?

The Big Investment of Stephen Curry

In 2011/12, Stephen Curry had a repetitive ankle injury that made him miss most of the season. During the summer, he had two ankle surgeries while he was trying to turn his career around, and like many other big talents that ended their career with cruel injuries, the Warriors fans did not expect to see … Continue reading The Big Investment of Stephen Curry

Poker and Trading – Two Unlikely Companions?

Cynics would say that playing poker and trading are similar in the sense that both are akin to gambling. But, for those who have done both, it is clear that there is a large level of skill involved in both the fields and it is the skill level that separates the best from the rest. … Continue reading Poker and Trading – Two Unlikely Companions?

Crude Oil

4 Commodities for 4 Seasons

The lifecycle of commodities play a role in the performance of many commodities that are produced globally.  While crude oil prices are driven by the supply of crude oil and the demand for products such as gasoline and heating oil, grains experience their greatest volatility ahead their harvests.  Coffee prices are affected by weather in … Continue reading 4 Commodities for 4 Seasons

Can Le Pen Make France Great Again?

The Story of Marine Le Pen

Marine Le Pen, the president of the National Front, is not just a politician, but also a layer taking France by storm at the age of 48, young when compared with the Establishment. Sarkozy, Fillon and Hollande all 62 years of age with only center-left Macron her junior at the age of 39. Marine Le … Continue reading The Story of Marine Le Pen

Coffee Beans

How do You Like Your Coffee?

Long before the Pepsi’s and Coke’s of the world, more than 300 years ago, to be precise, people found about the leaves of a plant which had a nice taste and seemed to give them a lot of energy when eaten as such or when they brewed and drunk it. This was from a plant … Continue reading How do You Like Your Coffee?

See All

FX Empire - the company, employees, subsidiaries and associates, are not liable nor shall they be held liable jointly or severally for any loss or damage as link result of reliance on the information provided on this website. The data contained in this website is not necessarily provided in real-time nor is it necessarily accurate.
FX Empire may receive compensation from the companies featured on the network.

All prices herein are provided by market makers and not by exchanges. As such prices may not be accurate and they may differ from the actual market price. FX Empire bears no responsibility for any trading losses you might incur as link result of using any data within the FX Empire.