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Trump presidency- Dollar jumps to is highest level.


The dollar jumped
to its highest level in two weeks and continued to reverse brief
initial losses from the surprise election of businessman Donald Trump as
U.S. president, as markets awaited more clarity on his economic policy.

Trump’s shock
victory over Hillary Clinton initially triggered a massive selloff in
risk assets – sending the yen, euro and Swiss franc higher – before
turning around in volatile trade, helped in part by Trump’s acceptance
speech which focused on unity and economic growth.

While
markets still struggle for a clear narrative on what a Trump presidency
means for global growth, his concilliatory tone boosted market
expectations that the Federal Reserve will hike interest rates in
December and supported dollar strength.

“The
dollar is taking back ground, particularly against the euro, since
yesterday’s election as market uncertainty was calmed by Trump’s more
presidential tone in his victory speech,” Caxton FX analyst Alexandra
Russell-Oliver said.

The euro earlier hit a two-week low of $1.0890, near its lowest against the greenback since Oct. 28 EUR=D4, currently sitting at $1.0900.

The
dollar is now trading up a third of a percent on the day against a
basket of currencies at 98.841 .DXY, breaking past 106 Japanese yen – a
4-month high – for the first time since July JPY=.

The
Chinese yuan weakened past 6.80 per dollar in the offshore market on
Thursday for the first time in more than six years on fears that U.S.
president elect Donald Trump will act on the protectionist rhetoric that
ran through his campaign, particularly regarding trade with China. The
yuan weakened to 6.8225 against the dollar CNH=.

“For
Asian currencies, the initial conclusions are somewhat negative, given
the trade dependency of the region, if not on the US, then on China,”
HSBC strategist Paul Mackel said in a note.

The
Australian dollar, hammered on Wednesday by concern over Trump’s
protectionist promises and their fallout for China and others, was back
up over 1 percent against the greenback AUD=D4.
That was helped by better-than-expected after mortgage data but other
analysts also pointed to the potential for a boost in U.S.
infrastructure spending, which would drive more demand for the iron and
other commodities Australia produces.

“Nobody
really knows what he is going to do and we don’t even have any idea
what his advisors are thinking,” currency strategist Lutz Karpowitz
said.

“Markets are
waiting to see if and how he will implement some of the stranger ideas
he spoke about during his election campaign. But he will definitely
implement some of those ideas which means that the current dollar
strength won’t be sustained.”

Others see substantial reasons to
expect more broad dollar strength next year. Trump has promised tax
reform which may draw more U.S. corporate profits home and higher fiscal
spending and growth is expected to spur inflation and dollar interest
rates higher.

The yield
on benchmark 10-year Treasury debt US10YT=RR fell back in Asian trading
to 1.995 percent, compared to its U.S. close of 2.064 percent on
Wednesday. 

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