- Trump’s press conference has investors on edge
- Global growth still hinged on US politics
- The dollar is up against European currencies
- Turkish lira hits record lows
At 11am eastern, Donald Trump will hold his first press conference since July. The speech will be the main driver for markets today, especially against the USD. Investors are hoping to move past the contentious topic of Russia and get some clarification on Trump’s plan for fiscal spending, tax cuts, and trade.
If the President-elect focuses on trade barriers and protectionism, the dollar is expected to fall. A renewed emphasis on fiscal stimulus and tax cuts would continue to support a stronger dollar. Already, markets are leaning towards the latter and we have seen broad USD appreciation, especially against the pound, euro, and other European currencies. Outside of Europe, we’ve seen more of a mixed picture. CAD hasn’t had a steady move down against USD overnight, keeping its head above water after a recent round of positive data. Strong commodity prices have continued to support AUD, and we would look for stronger data out of China to drive the Aussie dollar higher.
The World Bank has lowered global growth forecasts for 2017, but in speaking with Bloomberg this morning they also stated that the current forecasts do not account for any new policies out of Washington. Much like the Fed, they are waiting to see more concrete plans for change and wary of the US enacting trade barriers that would hurt the global landscape.
The Turkish lira continues to press new record lows, taking emerging markets down with it. Investors are converged on the thought that the central banks need to take action and stop the decline, although this seems unlikely at present. The sentiment has pushed the lira down another 3.26% against the USD this morning, BRL, COP, and ZAR are all down over 0.75% against the greenback as well.
EURUSD: Vulnerable to overnight gains for USD, the euro has continued lower ahead of President-elect Trump’s press conference.
GBPUSD: Both currencies are being driven by politics, and as Brexit keeps the pound under pressure a stronger dollar overnight pushed cable below 1.21
AUDUSD: The Aussie dollar continues to outperform versus major trading partners on stronger commodities.
USDCAD: Canadian remains more resilient against the dollar, but could be susceptible to USD strength later today.