Traders Cautious Ahead of Trump’s Inauguration

The day of Donald Trump’s inauguration has arrived and financial markets are displaying exactly the kind of caution you would expect given his incredible ability to send investors into a frenzy.

Throughout his campaign and since winning the presidency back in November, we’ve repeatedly seen two sides to Trump; the market friendly pro-growth, low regulation side and the protectionist, combative side that makes investors extremely uneasy. With it being unclear which side he’ll lean more towards today, traders are currently opting to sit on the fence but I imagine this will change dramatically later one once the ceremony gets underway.

EUR/USD – Euro Steady as ECB Stands Pat

We may not get many of the details we’re looking for today, for example on the fiscal stimulus package that has been promised, but we should get a sense of Trump’s priorities in his first few months as president which could set the tone for the markets. Investors have very much bought into Trump’s victory so far which has left plenty of scope for disappointment and a market correction, particularly with the Dow having failed repeatedly to break above the psychologically significant 20,000 level.

Dow Daily

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The pound is one of the worst performers so far today after retail sales data for December fell well short of expectations. It seems trading volumes in December could not live up to the levels around Black Friday in November, which was expected, but it was surprise just how big a drop we’ve seen. While sales were still massively up on last year, it will be interesting to see whether higher prices lead to a more sustained decline in consumer appetite or whether the impressive earnings growth we’ve seen ensures a swift rebound in the coming months.

GBPUSD Daily

For a look at all of today’s economic events, check out our economic calendar.

Economic Calendar

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.