The US equity markets are trending upwards, with an emerging narrative suggesting that President Donald Trump plans to hit the ground running in January. This contrasts with the situation in 2016 when Trump was deemed unprepared for office. There is a belief that this proactive approach by the administration will support the extension of the Trump trades at the moment and diminish the idea that it will take a year for any major initiatives to be delivered, which was the case in 2017. According to ING’s FX analyst Chris Turner, this could signal the beginning of a new USD bull trend.
The current trend is seeing an increase in volatility as market players actively position or hedge in anticipation of a stronger dollar. Despite this, experts advise against resisting this emerging trend. The NFIB small business optimism index is also set to be updated in October, with expectations that it will improve in the coming months due to the recent Republican win and potential changes in corporate taxes. Additionally, a speech from the Fed’s Christopher Waller is scheduled, where he is expected to follow Chair Jerome Powell’s lead from last week and avoid addressing questions about how the Fed will react to Trump’s proposed agenda. The DXY is facing resistance at 105.70, with focus on reaching the year’s high near 106.50.
Investors are closely watching the market movements as there are signs of an active engagement in a new dollar bull trend. With volatility levels on the rise, investors and corporate treasurers are seen positioning themselves or hedging their bets in anticipation of a stronger dollar. The current outlook indicates that fighting against this emerging trend may not be advisable. This is highlighted by the potential for the NFIB small business optimism index to improve in the coming months, following the recent Republican win and the expected impact on corporate taxes. Additionally, the upcoming speech by Christopher Waller from the Fed is likely to align with Jerome Powell’s approach of not commenting on how the Fed will respond to Trump’s proposed agenda. The focus is on the DXY, which faces resistance at 105.70 while aiming for the yearly high near 106.50.
As the US equity markets continue to surge ahead, there is a growing belief that President Donald Trump will be more proactive in his approach come January, unlike in 2016 when he was perceived as unprepared. This renewed confidence in the administration’s ability to deliver major initiatives in a timely manner is supporting the extension of the Trump trades and dampening concerns that progress will be slow, as seen in 2017. Analysts, like ING’s FX analyst Chris Turner, are seeing the early stages of a new USD bull trend which is marked by rising volatility and active positioning by investors and corporate treasurers. The NFIB small business optimism index is also expected to reflect the positive outlook in the market, especially after the recent Republican victory and potential changes in corporate taxes. Moreover, the upcoming speech by Christopher Waller from the Fed is anticipated to align with the Fed’s stance of not discussing Trump’s proposed agenda, with the focus on the DXY reaching new highs near 106.50.
The current market trend is indicating a USD bull trend on the rise, with increased volatility as investors and corporate treasurers position themselves or hedge in anticipation of a stronger dollar. While the market is actively engaged in this emerging trend, experts are advising against resisting it. As the NFIB small business optimism index is set to be updated in October, it is expected to show improvement in the coming months following the recent Republican victory and potential changes in corporate taxes. Furthermore, the speech by the Fed’s Christopher Waller is anticipated to mirror Chair Jerome Powell’s approach of avoiding discussions on how the Fed will react to Trump’s proposed agenda. The DXY is currently facing resistance at 105.70, with a strong focus on surpassing the yearly highs near 106.50.
