11/11/16 - Market awaits Trump's policies

USD

The dollar jumped to its highest level in two weeks and continued to reverse brief initial losses from the surprise election of businessman Donald Trump as U.S. president, as markets awaited more clarity on his economic policy.

Trump's shock victory over Hillary Clinton initially triggered a massive selloff in risk assets - sending the yen, euro and Swiss franc higher - before turning around in volatile trade, helped in part by Trump's acceptance speech which focused on unity and economic growth.

While markets still struggle for a clear narrative on what a Trump presidency means for global growth, his conciliatory tone boosted market expectations that the Federal Reserve will hike interest rates in December and supported dollar strength.

GBP

Sterling gained ground against both the dollar and the euro on Thursday as markets sifted through the potential global implications of Donald Trump's surprise victory in the U.S. presidential election.

The pound's troubles have been the main currency story on developed markets since June and the dominant view among banks and investors remains that it will fall further in the months ahead. However, the uncertainty generated by Trump's victory after a campaign that included a wide range of potentially disruptive policy pledges threatens to provide a different set of impulses over the next few months.

A number of banks have now said they expect the dollar to strengthen next year on the back of higher U.S. yields and inflation, which would put more pressure on the pound's dollar value as London starts formal talks on an exit from the European Union.

If Trump's victory foreshadows more victories for populist politicians in Europe next year; that may also give Britain more cover from the politically-driven selling that has hurt sterling since the Brexit vote in June.
 

Key Announcements

15.00 – USD – Preliminary UoM Consumer Sentiment; Forecast at 87.4 against previous of 87.2