With many eager to call an end to the “Trump bump” in the build up to President Trump`s inauguration speech last week, which saw equities fallback as the DJIA made 5 consecutive closes in the red, it seems that the Trump bump is here to stay a little longer as we see Wall Street count the green as all 3 major indices make new record highs. The DJIA finally peaked above the 20k mark as it gained 0.78% in yesterday session as the Nasdaq 100 and the S&P 500 followed suit, placing gains of 0.99% and 0.8% respectively. The renewed optimism comes as President Trump begins to back up his “good for business” stance that he took at his election victory speech. Trump has issued executive orders which are set to free up business from “over” regulation starting with the executive order for the oil pipelines to go ahead across America, which are set to give the USA an edge in controlling its own oil supply, minimizing potential shocks from global events, offering companies the luxury of more certainty which investors have gulped up as they continue buying company shares in the region.
The USD has, however, not fared as well as we see it slightly off its best levels as the USD Index, a measure of the strength of the USD against a basket of currencies, fell from its 14 year highs to retest the all-important 100 support level. The backlash comes as Trump has stated that the USD is overvalued, which was enough to see sellers convinced enough to begin taking short positons after the stellar rise of the USD post the Trump victory. The devaluating of the USD is seen as a way for the US to regain a completive edge in the global market in regards to trade and given trumps pledge to bring back jobs to America and renegotiate trade deals globally, we can’t help but think the devaluation of the USD will occur despite pledges by the FED that they will be increasing rates further this year.
All in all, markets will remain sensitive to all announcements and data release out of the US as they try to navigate these volatile times with better than expected data sure to lead to a bump up in the USD and equites while worse than expected data will see the USD and equities slide in a game of ups and downs until more clarity is found and equilibrium is restored.