Trumps speech last night was his first opportunity to comprehensively cover policy, aims and his next steps after what has been an arguably ineffectual if controversial first few months in office. With markets awaiting clarification, Donald Trump offered none. Much of his speech was in the traditional political vein of pledging to fight hate crime, and the constant re-referral to immigration which has dogged his first month in office, gave little for currency markets to chew on.
The most he asked congress for in monetary terms was a $1 trillion infrastructure package, but there were already murmurs before the talks that this would be watered down. Again lacklustre, and in the words of Donald Trump, SAD!
What could have been a major market mover with key policies announced, particularly with elaborations on his fiscal stimulus package, was avoided. For once President Trump didnt cause much of a stir. He may not have even made the front page.
Some of the recent momentum for the Dollar has been sapped. Yesterday growth for the US was downgraded for the year and is getting close to breaching below the 2% mark.
Trump did nothing to address this in his speech but he has been known to be selective on data sets since he assumed office.
There are a number of features which may cause growth in the US to slow. Is a strong Dollar strangling their export market? Is uncertainty towards a Trump presidency stifling investment in key sectors? Given that consumer spending is also down is it the American population feeling the strain on their purse?
This is a question for longer term macro-economists and are rarely the focus of the currency markets, which tend to take a short term view. However, the Pound did make some gains yesterday with some of the shine taken off the US Dollar.
US Dollar holders should consider that the spotlight is not only on the UK and the long-term Brexit negotiations, there are significant events taking place in the US as well, which have repeatedly blocked further improvements for anyone considering a Sterling purchase. Just a few months ago these would have been decade long-highs, and remain incredibly tempting to take advantage of. More tempting given than once an exchange has taken place, you no longer have to bite your nails that a Trump tweet will harm the value of your earned capital.
Weaker than expected data yesterday may stump the FEDs decision to raise interest rates in the very near term, and as such the US Dollar may enter a period of weakness. Get in touch with your broker on 01494 725 353 to capitalise on recent USD gains.
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