Trump is the Market Driver... Or not

Gonçalo Moreira, CMT Independent Analyst

Trump is everywhere. Trend direction is justified based on what the new U.S. Administration is doing or what the U.S. President tweets.

Do you really think that buying the US Dollar is going to be that easy?

Sorry, it is not...

Media attention may, through a cascade of attentions, lead many investors to eventually take seriously news that would normally be considered nonsense and irrelevant" (Robert Shiller, Irrational Exuberance)

I would like to remind traders that, collaborating with the down move in the USD, there are - as always- more than one sole cause. It's true that market participants are disillusioned with what they have idealized on the prospect of the new U.S Administration and, as a consequence, have been reloading risk-off trades. But there are other broader market developments, some of them prior to the recent healthcare bill-spurred technical correction in equities and the U.S. Dollar, which merit being recalled.

At FXStreet, we read all the material published on our site and pick the key bearish and bullish arguments expressed by our dedicated contributors on several asset classes.

These are some of the arguments explaining the current USD bearish trend:

The stall in US interest rates, lower odds for a rate hike - by Boris Schlossberg, Kathy Lien
The US Treasury has significantly eased USD liquidity in the USD money market - by Danske Research Team
Regulatory changes in U.S. money market - by Axel Merk
Globalization has driven countries to desire a weaker currency - including the USA, by Alan Hill
OECD models see the euro at nearly 25% undervalued - by Marc Chandler
A depreciation of the dollar would reduce pressures on countries with fixed exchange rates and external debt - by Northern Trust Economic Research Dep.
China threats to sell U.S. Treasuries - by Kathy Lien, Barbara Rockefeller
Donald Trump’s proposed fiscal stimulus and investment infrastructure failing to keep up with market expectations - by Lukman Otunuga, by KBC Market Research Desk
Dollar strength could become a threat to US competitiveness - by Kathleen Brooks
The US dollar is vulnerable to a trade war with China - by Barbara Rockefeller
USD strengthening tends to be up to and at the beginning of a hiking cycle - thereafter a correction- by Danske Research Team
The dollar is ready to begin its 15-year super cycle decline - by LikesMoney
Interest rates in part of the rest of the world may have reached their lows- by Axel Merk

These ideas are displayed in our Sentiment Aggregator, where we organize expert advisory opinion in bullish and bearish categories. Look for more reasons for a positive run in the EUR as well as offsetting arguments. Bookmark this page for your reference. This will allow you to avoid too simplistic reading of the news.

Make sure you do not place all your attention in monitoring one sole cause. Trump is a market mover, but not the market driver.

Author

Gonçalo Moreira, CMT

Independent Analyst

As a trader in the foreign exchange market since 2005, Gonçalo Moreira honed his analytic and strategic skills through the Chartered Market Technician (CMT) designation. 

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