Whilst Trump has been backtracking on his more outlandish promises, such as building a wall along the southern border with Mexico and to repeal Obamacare, his plans for his first day in office are still sweeping.
In a video released late last night Trump made promises for what he would accomplish on his first day, one thing being the repeal of the Trans-Pacific Partnership.
This is a massive trade deal bringing together 12 countries which represent 40% of the global economy in a trade agreement that was expected to bolster US and regional growth, as well as stability in a region increasingly threatened by Chinese aggression.
Trump is appealing directly to blue collar workers is America who have always feared globalisation. But how will this play on the currency markets that Trump would so easily disband years of negotiations on an unprecedented trade deal? Given how hypersensitive the current market is, I believe we can expect the Dollar to weaken as the day progresses and the world wakes up to digest the news this morning.
Durable goods orders for the US economy are to be released tomorrow and are expected to improve following a contraction from the previous month.
Durable goods are a measure of long-term orders in the US economy. Essentially these are mass orders which take months, even years to fill. Say a car manufacturer needs tens of thousands of a particular model, or a few aeroplanes, they are buying these with the expectation of a consumer market further down the line. This is why the figure translates into confidence or anxiety on the Dollar.
Markets were anticipating a heavy improvement this month, likely with businesses not wanting to wait for the outcome of the election and the recent US FED interest rate decision. Rather markets expect all long-term orders to be covered while credit is still incredibly cheap and avoid the prospect of buying following a potential December rate hike.
Confirmation of this result will likely strengthen the US Dollar, as such US Dollar buyers should consider taking advantage of this window of opportunity before this risky release to your position at midday tomorrow.
Further US Dollar strength could emerge off the back of tomorrows Durable Goods release, therefore clients looking to buy the US Dollar may wish to take advantage of the recent spike in Sterlings favour. Call our trading floor on 01494 725 353 or email me here to book a quote.
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