Whether you voted for Donald Trump or you didn’t, the current effect of this change on the financial market seems to be uncertain. This could potentially strengthen the US dollar, but what does it mean for other currencies like the Pound? We’ll take you through the different points in detail about how the markets are looking now and what this means for the markets in 2017.
There were a number of Forex articles leading up to the election that were adamant that Trump winning the presidential election would weaken the dollar in the US economy, due to it being a very uncertain time, and it being potentially adverse to what traders expected to happen.
Since January’s inauguration, stocks have receded slightly, leaving the Dow at 0.2%, and both the S&P and Nasdaq were showing gains of 1.1% and 2.91%. This shows that there aren’t any problems within the markets in regards to Congress.
Taking the U.S. Dollar Index into account there was a crash before Trump’s presidential win and then the results were in the market, which meant there was a level of certainty and there is potential for the US dollar based on Trump winning.
The interesting point of Donald Trump’s acceptance speech is he mentioned how he will focus on building the infrastructure of America, what this means is investing back into the country. This will indeed have implications for the markets with the energy and oil prices. At the moment there is no clear picture as to what will happen with that, but if Donald Trump continues with what he said he would do and improve the lives of the American people he will need helicopter money. This could expand the market which will definitely be positive for the stock exchange.
It will be interesting to see what happens to American industries, an important one is defense as the military is high on Trump’s agenda, either for maintaining or investing. Healthcare is one thing at the forefront of everyone’s minds, the possibility of Trump wiping out Obamacare. It certainly isn’t what the Republicans are in favour of happening, but Donald Trump has support there which leads him to have that power. There are companies totally dependent on Obamacare contracts, and if Obamacare is stripped away then those companies could risk losing money and go bust. In layman’s terms, American healthcare is an industry that could collapse as a result of Obamacare being removed.
There are currently other industries that are in weak situations, which means if there are to be problems in the markets then they could be in trouble. The automotive industry is really struggling and in a vulnerable situation at the moment, particularly auto loans, but whether anything will happen to change this hangs in the balance.
There has to be some correction to the way things are run otherwise the Federal balance sheet won’t be able to maintain the expansions that take place on a regular basis.
In terms of Trump’s foreign policy could isolate America, he has threatened to build a wall between America and Mexico, and so that could have ramifications. It all depends on his relations with other nations as to whether America will be left out in the cold within the economic markets.
Keeping an eye on the markets using the leading online trading platform CMC Markets will be hugely beneficial to traders so they have knowledge of when stocks rise or fall.
Many traders prefer to trade using the U.S dollar as the main currency as it is the most liquid, and so with the markets on a firm footing, earning growth looks more likely to remain positive throughout 2017. Since Trump won the election, he has knocked the dollar to +0.04% lower, taken credit for companies such as General Motors GM, +0.26% and United Technologies Corp. UTX, +0.87%. Trump’s presidency has already given some people a sense of optimism. We don’t know what will happen in the coming months, only time will tell if Donald Trump’s presidency and the way he works, will affect the market in the long-term, it could be a painful wait or it could just be the greatest thing in history.