Dollar slows down ahead of Trump’s first Congressional address

By Ananya Dutta | Bangalore – Right after Donald Trump was elected to the office of President; the US Dollar index reached a record 14 year high in anticipation of new fiscal stimulus and reform policies by the new administration. However, no specific fiscal reform has materialized yet, which has slowed down the dollar considerably.

Now the focus has shifted to the upcoming Congressional address by President Donald Trump. The investors seem to be waiting before investing. However, there was a marked increased overnight in dollar price as US sought to increase their military budget by $20 billion. “The talk regarding military and infrastructure spending raised expectations towards Trump’s speech to the Congress later today, lifting the dollar and Treasury yields,” said Shin Kadota, senior forex strategist at Barclays.

Experts believe that there might be turbulence ahead for the currency market if Trump issues any statements regarding countries like China, Japan, Mexico and Germany and other US trade partners. Owing to the fact that tax reforms will only be available in March, only time will tell how much the dollar can gain from Trump’s speech later today.

The dollar /yen pair reached 112.660 yen showing a marked gain from Monday’s 111.920 while the euro has been holding steady at 1.0586 dollar. The pound has seen a consistent drop for the past twelve days as the possibility of Scottish independence vote another uncertainty to Britain’s already uncertain economic future. However pound gained a little over Monday’s $1.2384 and fetched $1.2430 today. Australian dollar is at 0.7682 dollar right now, gaining only 0.1% over the previous day’s price.

Asian stock markets are showing a strong tendency to go up ahead of the speech. The Nikkei Stock Average rose 0.7% following losses on Monday. Korea and Shanghai’s stock index was also up by 0.3%. Only in Hong Kong a difference in regional trend was noted as the Hang Seng Index dropped by 0.1%. This drop has been attributed to the shakeup in China’s regulations in equities.

(Reporting by Ananya Dutta; Editing by Mohith Agadi)