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Sell off on the dollar after Trump’s Election. Or Maybe not.
Published 09. 11. 2016
In the first few hours after the election the US Dollar was heavily sold, with the exchange rate between EUR and USD rallying around 1.13; but the rally did not last for long and the greenback started a difficult recovery, with the EUR/USD rate back to 1.10. This volatility might be an overreaction of the markets, scared by the thought of Donald Trump in the White House, or a sense of calm after his first speech, which tried to reassure the country and put a divided nation back together.
Technically the EUR/USD is still inside the lateral trading range 1.05 -1.15, which has been holding its price for almost two years. The main focus will probably be on the Fed’s decisions regarding the interest rate hike, which we could still see in December 2016 or, if postponed, early 2017.
In the end, the result is a moderate shock. Although early market moves have hallmarks of Brexit with a difficult opening, the first few hours have not demonstrated any panic selling and investors are calmer and looking to buy at discount. Early indicators suggest that the wave of surprise from the US has not swept as strong as the EU Referendum did in June. It is important to consider that this is an initial reaction to a decision which could affect the world and all financial markets, let’s see how the markets continue over the coming weeks.
Carlo Alberto De Casa
Carlo Alberto De Casa is Chief Analyst for the derivatives broker ActivTrades London.
He worked for Bloomberg in the City of London before joining in 2011 the Forex Broker ActivTrades, where he is specialized in Forex and Commodities markets. He has cooperated with “La Stampa” and other newspapers to publish in 2014 a book about gold (“I segreti per investire con l’oro” – Hoepli).
The thoughts and opinions expressed here are solely those of the writer and do not necessarily reflect the view of ActivTrades Plc. This commentary is for information purposes only and should not be considered investment advice. Any forecasts given are not a reliable indicator of future performance and the decision to act on any ideas and suggestions presented is at the sole discretion of the reader.