No Love for Trump (enomics)

The market’s love affair with Trumpenomics is dead

The level of anxiety and confusion has ratcheted higher at the dealing desk over the past 24 hours as traders are busy dissecting the current administration’s intentions. While all roads are pointing to a definitive shift in US FX policy, it’s just too early to pass that judgment, let alone give into verbal intervention due to the short-term hysteria it usually causes. But as we try to understand the complexities of local EM FX markets in these trying times, the level of uncertainty increases tenfold.


If headline driven uncertainty wasn’t enough, traders will be seeking clarity from the FOMC on monetary policy which will be released later in the New York session. But given the recent disruptions in financial markets, not to mention the run of tepid US economic data, I struggle to envision any significant hawkish shift. Even if they did, I’m not sure it would be the elixir to cure the USD of its recent executive order driven funk.


While the USD continues to trade defensively in risk off fashion, we need to be vigilant of the contagion effect locally, which could negatively affect regional bourses. While SGD KRW and TWD have benefited from the recent USD capitulation, we may only be viewing the tip of the iceberg on this recent risk capitulation so caution should continue to be the rule of the day.


It’s clear that Investors in regional currencies have flattened their base-case reflationary views, and whether the FOMC or Friday’s NFP can move the USD needle is debatable at this juncture. However, in the EM APAC space, we need to remain vigilant for sudden whipsaws in USD sentiment as it’s only one executive order or headline away from occurring.


China official January non-manufacturing PMI came and went with little fanfare — t 54.6 versus 54.5 previous.

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.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes