fbpx

One year on: A look back at the Trump Trade Trend

ForexFraud
Brought to you by: ForexTime LogoYour capital is at risk

The anniversary of his election victory is approaching and there is still a sense of disbelief whenever you hear the phrase ‘President Donald Trump’. The conversation around Trump’s inability to win the election, was the topic of choice at dinner tables, but forks dropped when the results were tallied on election night. The 45th President of the United States has had an impact on the markets so great, that it has coined its own name – Trump Trade.

Trump’s influence was evident as soon as the results came in, with the USD taking a fall and the Dow Jones dropping by 800 points. In contrast, the moment the new president-elect stood for his speech, the dollar regained its stability and the stock market rose with a triple-digit rally.

Trump’s off the cuff remarks early on in his presidency, accusing China of currency manipulation and Germany of using a ‘grossly undervalued’ euro to exploit trading partners, were not well received by the markets. The accusations swiftly sliced 2.6% off the dollar index. Then it was time for oil prices to join the movement in April, with Brent and WTI Crude pricing at $56.08 and $52.94 respectively after Trump ordered an air strike on Syria.

Trump Trade was still in full effect in March and July, following the jettisoning of the Republicans’ Obamacare Repeal, twice. These events appeared to prove that Trump would not be able to easily implement his promised legislative reforms, and the markets responded with a stunning rejection of the USD in favour of more ‘reliable’ assets.

When it became clear that the Washington establishment was not going to grant Trump’s protectionist agenda free rein, Trump Trade seemed to lose its bite over the summer. The President’s ill-advised reference to North Korean leader Kim Jong-Un as ‘Rocket Man’ and sarcastic comments towards Vladimir Putin might have sent social media into a frenzy, but for once the markets hardly moved.

The third quarter brought with it the unveiling of the ‘biggest tax reform in decades,’ which rekindled faith in the USD, boosting the currency by 2.2%. The plan has attracted a great amount of criticism across the board, however, the promise of $6 trillion in tax cuts has rekindled investor interest in the dollar.

While Dollar bulls may benefit from the renewed sense of optimism over Trump’s tax reforms, some headwinds could come in the form of uncertainty over who the next chair of the Federal Reserve will be. Current speculation puts hawkish John Taylor as the next Fed head. It should be kept in mind that a hawkish Fed Chair is likely to push for faster interest rate hikes, potentially strengthening the dollar and curbing consumer spending.

As Trump approaches the anniversary of his election, a pervading lack of confidence in the President now colours much of the media rhetoric. Traders are inclined to give him more credit, and renewed optimism in his ability to push through tax reforms sparked a dollar rally on Friday, October 20.

The U.S. stock market is relatively calm, despite large gains in the last six months. When you have good GDP growth and low interest rates, it promotes a healthy bull market. However, so far October is one of the least volatile months in modern history and this never augers well for sustainability. Experts are saying that there is a correction on the cards.

If this happens, it will be interesting to see how the dollar fares and whether Trump gets the fallout. With almost one year down and three more to go, there is still plenty of time to see whether the Trump Trade is a trend that is here to stay, or whether it was simply the markets adjusting to perhaps one of the most controversial presidents the Americans have ever elected.

By FXTM’s Senior Staff Writer, Samantha Robb

For more information please visit FXTM at www.forextime.com.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal or investment advice. FXTM does not guarantee the accuracy of any information made available and assumes no liability for any loss arising from any investment based on the same.

Risk Warning: Trading Forex and CFDs involves significant risk and can result in the loss of your invested capital. Please read FXTM’s full Risk Disclosure.


ForexFraud

Latest news

Big week for GBP/USD: what’s on?
With a new foreign exchange trading week now getting underway, it’s a good time to look ahead and see what is happening in the markets. Read more
Bithumb chair in fraud allegations
Two men in South Korea are continuing a serious disagreement over which of them is responsible for an alleged fraud. Read more

Safest Forest Brokers 2020

Broker Info Best In Customer Satisfaction Score
#1 ForexTime LogoYour capital is at risk Founded: 2012 Global CFD and FX broker
Number One Broker
Best FOREX BROKER Visit broker
5
#2 Forex Broker Pepperstone LogoYour capital is at risk Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
5
#3 Plus500 Logo80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008 Global CFD Broker
Number One Broker
Best Trading App Visit broker
5
#4 Your capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
5
#5 FxPro LogoYour capital is at risk Founded: 2006 CFD and Cryptocurrency Broker
Number One Broker
CFD and Cryptocurrency Visit broker
5

    Forex Fraud Certified Brokers

    Oanda Small Logo
    XTB Logo
    IQ Option Logo
    ATFX Logo
    OctaFX Logo
    Swissquote logo
    FXTM Logo
    VantageFX Small Logo
    XM Logo
    Forex.com Logo
    Oinvest Small Logo
    iTrader Logo
    HYCM Logo
    City Index Logo
    Plus500 Small Logo
    LegacyFX Small Logo
    Pepperstone