The Effect of Trump on Forex Markets

The Effect of Trump on Forex Markets

Once it was clear that President Donald Trump was more than willing to implement a pro-USD policy, the USD gained strength against major Forex market players and more notably the Japanese Yen. A recent development has seen stock traders being able to trade Forex in their individual stock accounts via ETFs. President Trump has been vocal on Twitter advocating for America first policy and protecting the USD to the best of his capabilities. Between the time of his Election late last year to recent weeks, oil prices have rallied over time. It is worth noting that oil has a significant effect on some currencies around the globe.

The key to Trump’s branded form of America first is the initiative to keep jobs and as many dollars as possible in the US at all costs. The blasting of China as a currency manipulator as well as automotive companies has had enormous effects on the Forex market in the country. Mr. Donald Trump has been on track claiming that the Mexican model of Chevy Cruze manufactured by General Motors’ is sent to the US should face rigid taxation rules. On the other hand, China has been regarded one of the world’s major economic powers hence presenting new challenges to Trump in his strategy of labeling it as a currency manipulator. The country [China] holds $ 1.12 trillion worth of US Treasuries which gives it a significant boost over Trump’s claims.

Mexico has a lot to worry about. Over 80% of Mexico’s exports are to the North of their border. This means that it stands to lose an enormous amount of business if the NAFTA is scrapped and tariffs re-introduced. The oil gains over the past two months have not stopped peso from dropping by a margin of 13.4% over the same period.

Donald Trump seems to be warming up to Russia. A country that has always been perceived as an enemy to the US economy and the dollar. Since his election in November, Trump has increased the volume of trade between US and Russia by 7.7%. Many experts have observed that the warm relations between Trump and Russia are paving the way for easing of sanctions that were put up against Moscow’s aggression towards Ukraine in 2014.

In the current world dominated by social networks, a Trump tweet can cause currency shares to Skyrocket in a single minute based on how the market shall interpret the tweet. Whether you have basic knowledge about the Forex market or not, you need to worry because the impact of such a tweet shall be manifested in the stock exchange and major players such as CMC Markets shall reckon the effects.

The previous holders of the Oval office have been regarded as great globalists who advocated for a stable Forex market simulating a one world currency. Trump seems to be moving in the opposite direction by imposing sanctions on global economic superpowers such as China and triggering taxation of imports from Mexico. By doing so, Trump is breeding and feeding adamant force in the Forex market that never existed before. According to Forex Experts, President Trump has created something strange that can only be referred as the “Trump Effect” on Forex markets

The Brexit is nothing compared to the effects of Trump’s policies on the Forex market. These policies were not well thought. The future collateral damage and financial ramifications on the Forex market shall be devastating. Take a minute and reflect on the enormous portfolio rebalancing and the Knee-jerk reactions from the market towards these policies.

On the right side of the Trump Effect to stock investors, it shall make companies to undergo rapid evaluation. Most of the corporations who are on the receiving end of the Trump effect are deemed to suffer immensely while those who align themselves appropriately shall enjoy immense profits. Implementing the Trump policies on protection of the Dollar can lead to the creation of a golden era of finance. Companies who won’t take appropriate preventive measures to hedge the Forex market risk, and they are deemed to run bankrupt and eventually close down. The Trump Effect is here with us, and we better think straight on ways of coping with it.