Donald Trump’s future Tweets could cause US Dollar volatility

Although some have considered Mr Trump’s Twitter outbursts as being somewhat controversial, the use of his Twitter feed with a following of 19 million people is beginning to change the way currency markets react. His secretary has confirmed that he will continue to post updates once he is President, and these unexpected and sudden announcements have the capacity to cause huge market swings. Last Thursday he used Twitter to warn Toyota against building its new manufacturing plant in Mexico, stating that if they went ahead they would face enormous border taxes. Within minutes Toyota’s share price fell by 3% and $1.2 billion was lost from the company’s value, and consequently the US Dollar weakened.

Tweets from Mr Trump are random and unexpected, and could impact US Dollar exchange rates almost instantly. We have a number of contract options for our clients to use to protect themselves against unexpected market movements.

US employment data for December released on Friday showed a slowdown as only 156,000 jobs were created compared to 204,000 in November. This was the last full month set of jobs data released before Donald Trump takes up his new role as President on 20th January, who has promised to create an additional 25 million roles over the next 10 years.

US Christmas Retail Sales figures on Friday

US data is relatively light this week, with the main focus being on Thursday when Jobless Claims for last week are released. If this shows that more people filed for unemployment benefits, in line with the poor December jobs data mentioned earlier, we could see US Dollar weakness. Retail Sales figures for December are released on Friday and I would anticipate this to be higher due to Christmas consumer spending.

Any clients looking to buy or sell US Dollars over the next 18 months can secure today’s exchange rate with one of our Forward contracts, with a small deposit. Please get in touch with your personal broker today to find out more about how this could benefit you. Alternatively, you can email me directly with any questions at ajs@currencies.co.uk.

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