The Sun Will Still Rise Tomorrow
Well, that didn't go to plan.
So far the market has gone from denial, to risk off to a gradual buy back of the dollar, as whoever wrote the first part of Trump's acceptance speech was definitely worth their money – the second half sounded like the father of the bride speech at a wedding that has dragged on uncomfortably long – but we are where we are and for the moment the FX market has largely taken the outcome in its stride – the exception being the Mexican Peso, which has been absolutely hammered –
Other asset classes are starting to recover following the speech, at one point Dow Jones futures were down by 700 points. European markets are all down between two and three percent at the moment, but it's a long day ahead.
We might see service sector output change globally on the back of this, as the entire political polling industry has just been made unanimously redundant, following another prediction failure!
There isn't much of an opinion we can offer at the moment. The initial talk from Trump was of reconciliation and building bridges (metaphorically and actually) so we'll see if people continue to buy what he's selling.
Given the lack of moves into and out of safe haven currencies, we're hoping we're going to get a pretty range bound day whilst the market digests the longer term implications of this. Trying to do that could take the remainder of the week at least, so we could be range-bound on this for the time being. Our medium term forecast had been Dollar strength toward the end of the year and we can't see why that needs to change too much for now.
We're around, we're still full of caffeine and we're happy to be a shoulder to cry on if you need us!
Have a great day
©Hamilton Court FX