Trump Era Begins, Vows “America First” In Speech
Donald Trump took power as the 45th President of the United States on Friday, delivering a speech which was perhaps the most xenophobic one in US history. Trump’s message screamed out unity and went to great lengths to invoke a unique spirit of American pride. He pledged to pursue “America First” policies and laid out 2 simple rules - “Buy American and Hire American”. He said this would end the carnage of rusted American factories and protect jobs in the country.
Today is a light day for economic releases around the world. However, there might not be a dearth of market-moving events with a new speak-your-mind President at the helm in the US. In the Eurozone, the European Central Bank (ECB) President Mario Draghi's speech along with the region’s consumer confidence index is due later today.
Pound Sterling – UK Markets
The Pound is trading higher against the US Dollar this morning, hitting the crucial 1.24 mark, amid broad based weakness in the greenback. There are no economic data points scheduled for release today in the UK. Market participants now shift focus to UK’s Supreme court decision set for tomorrow. The court decision will make it clear whether Britain’s Prime Minister, Theresa May has the right to pull the trigger on Article 50 of the Lisbon Treaty, which sets of two years of divorce negotiations, or will need a parliamentary approval to do so. Moving on this week, investors will be keeping tabs on a series of data points namely UK’s public sector net borrowings, CBI distributive trades survey and industrial trends survey along with the nation’s gross domestic product, which is expected to slow in the fourth quarter of 2016.
Today, the UK PM, Theresa May, at her first regional cabinet meeting, will launch the industrial strategy for the post-Brexit era which will outline a new, interventionist approach to balance the services-based economy.
US Dollar – US Markets
On Friday, Donald Trump was sworn in as the 45th President of the United States. Following his inauguration, President Trump delivered a speech laced with protectionist rhetoric that lacked details relating to his election campaign promises. This offset optimism that he will follow through on promises of tax cuts, fiscal stimulus and the much-needed infrastructure boost for the US. The protectionist tone of his speech dented market sentiment, leaving the US Dollar to end the week lower against most of its peers. Elsewhere, the Philadelphia Fed President, Patrick Harker, gave an upbeat outlook of the US economy and repeated his stance that the central bank might increase interest rates three times this year, if the labour market improves further and inflation moves towards the central bank’s 2.0% target.
Extending losses for the fourth consecutive session this morning, the greenback is trading lower against the Pound and the shared currency. In the US, there are no economic releases scheduled for release today. Looking ahead this week, the US GDP data for 4Q 2016 along with services and manufacturing PMI are expected to be market movers.
Euro – European Markets
This morning, bearishness around the US Dollar has allowed the Euro to surpass the crucial 1.0720 mark against its US counterpart. The greenback has lost ground in response to the protectionist tone from the US President Donald Trump’s speech at his inauguration on Friday. Ahead in the day, investors look forward to a speech by the ECB President, Mario Draghi in Torino, Italy along with the Eurozone’s preliminary consumer confidence index for January, scheduled later today. The region’s consumer confidence is anticipated to slightly improve in comparison to December. Tomorrow, preliminary reading of manufacturing and services PMI for January across the Eurozone, will be on traders’ radar. The Euro area’s manufacturing PMI is expected to remain unchanged while that for Germany is estimated to register a marginal decline.
On Friday, the shared currency ended on a stronger footing against its major peers, driven by robust data print from the Eurozone’s powerhouse economy. The German producer price index marked its strongest annual increase in almost four years in December.
Other Currencies – Highlights
The Canadian Dollar is trading on a stronger footing against its US counterpart this morning. Today, the sole economic release in Canada is the nation’s wholesale sales data for November and is likely to grow at a slower pace in November, compared to the previous month’s reading.
On Friday, the Canadian Dollar had initially found support against the US Dollar, as oil prices continued to climb for the second straight day, thus boosting demand for the commodity-related Canadian currency. However, the domestic currency ended lower against its US counterpart, following the release of dismal inflation and retail sales data. Statistics Canada indicated that annual consumer prices rose at a slower than anticipated pace in December. The rising gasoline and electricity costs were countered by a fall in food prices, which recorded its third consecutive decline. In a recent policy meeting, the Bank of Canada had expressed fears that the new administration in the US could hamper the nation from missing its inflation goal. Additionally, the nation’s retail sales advanced less than expected in November.