USD Stages a Rally against the EUR and JPY During a Volatile Week

Nov. 10, 2016 (Tempus Inc.) – The U.S. Dollar is up against commodity-based currencies while staying relatively quiet against its major peers. Markets are acting in odds with what was predicted if Trump triumphed, but historically the business world prefers the prospect of Republicans who’ll likely come into power seeking less regulation and fomenting less intervention in the free market.

Trump’s trade, or rather anti-trade rhetoric, during his campaign has economists concerned, but thus far markets are rebounding, big league, after dropping for eight consecutive days. The greenback’s strength is due to data releases that satisfy the Fed’s requirements ahead of a gradual hike.

Jobless Claims were slightly lower than expected; helping to solidify the labor market’s strong run. Commodity prices are rising, stocks are thriving, and USD is appreciating. How long this will keep up is hard to tell, but the “buck” is holding steady for now. Populism succeeding is morphing how we gauge economic performance, so things could change quickly.

JPY

The Yen fell by over 5.2% in value since the U.S. election results showed Trump succeeding. The move was a surprise because Yen forecasters estimated the currency propelling as a safe-haven to a Trump win that would dismantle global markets. This didn’t happen.

Equities flourished and thus Yen declined as it usually does when risk-appetite grows. Japan’s economic situation is not great as deflationary pressures remain and wages remain stagnant, but experts foresee Yen rising by 17.0% by the end of Q1 2017 if Trump delivers on his message of upending globalization and outsourcing.

EUR

The Euro kept trending downward yesterday, losing ground in the midst of a shocking result in America and poor data out of the EU’s second largest economy. France produced some underwhelming figures as Industrial Production revealed contraction of 1.1% and payrolls grew at a measly 0.3% pace.

Now that the campaign in the U.S. is over, the spotlight may be on the Italian referendum coming in December in which the people will decide changes to the constitution and balance of power between executive and legislative branches. The political red-tape in Italy played a role in preventing much-needed bank and fiscal reform after the 2008 crisis negatively impacting the “old boot’s” ability to recover since then.


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