USD: Looking out for executive orders – ING

The big day has finally arrived. Financial markets are on tenterhooks to see what executive orders newly elected US President Donald Trump will enact on his first day. There's a lot of focus on immigration controls and declaring a national energy emergency to allow more US oil and gas production, ING's FX analyst Chris Turner notes.

DXY to have another test of 110 this week

"FX markets are most interested in what he has to say about tariffs and what kind of pain the Oval Office plans to inflict on major trade partners. At last week's nomination hearings, incoming Treasury Secretary Scott Bessent said that tariffs would be needed to address unfair trade practices, support government revenue, and to be used as a negotiating tool."

"In terms of what is currently priced for tariffs by financial markets, we find the online prediction websites quite useful, such as Polymarket and Kalshi. Polymarket is running a book on which countries will receive US tariffs in Trump's first week. China is priced at 56%, Mexico at 54%, Canada at 45% and the European Union at just 7%. There is also the case – using Scott Bessent's remarks about tariffs as negotiating tools – that the new administration goes in on tariffs hard at the outset."

"Price action could well be muted today since US markets are shut for the Martin Luther King public holiday. And the US data calendar is quiet this week, especially with the Federal Reserve in its blackout period ahead of the next FOMC meeting on 29 January. But overall, we have no confidence in calling the dollar lower on market positioning and instead see scope for DXY to have another test of 110 this week."