USD Rises Ahead of President-Elect News Conference

The dollar gained ground against the yen, euro and pound on Wednesday, as expectations of a pro-growth message from U.S. President-elect Donald Trump’s first news conference prevailed over worries about what he will say on trade and China.

The dollar has gained broadly since Trump’s victory in November as investors bet he would boost public spending and spur repatriation of overseas funds by U.S. companies, policies expected to bring higher inflation and interest rates.

But more doubts have emerged in recent weeks about that narrative, and investors will have a close eye on what the new president says about labeling China a currency manipulator and free trade more generally.

“The surprise would be if he talks about his concerns about dollar strength,” said Simon Derrick, head of research at Bank of New York Mellon in London.

“He has made comments suggesting he is uncomfortable with a strong dollar, but the market has largely ignored them.”

The dollar index rose 0.3 percent to 102.37, at the top end of a range it has held for the past week and off a 14-year peak of 103.82 hit on Jan. 3. .DXY Against the yen, it gained almost half percent to 116.28 yen, still two percent off almost one-year highs hit in December.

The euro was also down 0.4 percent at $1.0515 EUR= after brushing a 10-day high of $1.0628 overnight. Trump’s news conference – his first since the election – is due to start at around 11:00 EST (1600 GMT).

“The dollar is still holding up quite well and there is a presumption that we are going to get support from tighter monetary policy and looser fiscal policy,” said Jeremy Stretch, head of currency strategy at CIBC in London.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza