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Trump driving direction as a flood of key data hits the market this week


Donald Trump remains a key factor for driving direction on financial markets, and with Treasury yields beginning to rise again this looks set to signal a new trend formation on the US dollar. We look at the impact on forex, equities and commodities as a raft of key tier one economic data is set to flood the market this week.

Trump Oval Office

Markets still seem to be very much beholden to a number of key factors, however one man, Donald Trump is a key source. Still very much in the early days of the Trump Presidency (just over a week) and the politics is very much at play as Trump is trying his best to keep his campaign promises. So far, markets have maintained their positive stance on his policies. Despite the move to renegotiate the NAFTA trade deal, scrapping the US involvement in the Trans-Pacific Partnership and a pledge to “build the wall”, these protectionist moves have so far not overly concerned the markets. In fact the concern seems to have come prior to the inauguration as opposed to now. The key market driver remains the direction on Treasury yields and despite a brief questioning of the positive correlation with the dollar last week, the relationship remains strong. Also, perhaps of a surprise is that the protectionist policies are not strengthening demand for safe havens. In fact, the yen (the classic forex safe haven) is now underperforming the major currencies, whilst gold is also now beginning to trend lower and of course Treasury yields are also tracking higher once more. Of course, there is plenty of time for these trends to turn around if Trump cranks up the protectionist rhetoric, but it seems as though the dollar positive moves are regaining momentum. This will be a volatile week with PMIs, the FOMC and payrolls, so data is important, but Trump remains the key factor.

 


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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.