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Trump causes dramatic currency movements around world

Published on 8 March 2017 in News - Pages by Raffick Marday

The entire world was anticipating the first ever speech of United States President Donald J. Trump to Congress, especially other world leaders, corporate entities, and investors. Investors knew that the speech would have an impact on world markets and currencies, and many were pleased overall with how it turned out.
The speech was surprisingly non-combative, which was unexpected, given Trump’s rhetoric during the campaign period and even after his win. The result was positive for most of the world currencies, particularly the U.S. Dollar. Let’s take a look at the impact on world markets in this latest currency news – Wednesday.

US Dollar

The US dollar hit a two-month high thanks mostly to Trump’s speech and promise to spend on infrastructure and give the middle-class tax relief. Additionally, it is looking likely that the Federal Reserve will hike up rates this month, which would show confidence in both the U.S. and global economies. A European bank trader claimed, “The U.S. economy is strong enough to allow the Fed to raise rates.” This bodes well for the dollar and it shows that it will be strong for quite some time.

Trump causes currency movements around the world

Australian Dollar

The Australian Dollar fell to a 3-week low, being down 0.8%, against its American counterpart, mostly due to the looming U.S. Fed rate hikes that are expected in a few weeks. According to Peter Rosenstreich of brokerage firm Swissquote, investors are moving quickly in order to adjust to the expectations due to the impending rate hike.

Turkish Lira

In the Middle East, the Turkish currency Lira fell, thanks in part to the strength of the U.S. dollar. However, analysts were quick to point out that the dollar was not the only factor for the weakening of the lira. The tense political situation in Turkey is also a major factor. President Tayyip Erdogan has a shaky relationship with the national media and again criticized a major news outlet this week, contributing to the decline of their currency. Turkey is also continuing its military campaign in neighbouring Syria, which also contributes to the rise and fall of the lira.

Trump causes dramatic currency movements around world

British Pound

The British Pound continued its slide, marking a six-week low, thanks to inadequate economic data from the UK, as well their political unease following the nation’s exit from the European Union. These two factors are major contributors, although projections are positive, particularly following a by-election win by Prime Minister Theresa May’s ruling party against their opposition Labour Party.

Other currencies

The strong U.S. Dollar has contributed to the weakening of other world currencies. The New Zealand Dollar fell slightly over 1%, while the Canadian Dollar fell to its weakest in two months. The Russian Ruble also fell to a one-month low. The Euro was mainly steady despite the strong USD, thanks to a stronger European economy, and data from the surveys of the upcoming French presidential elections.

Be on the lookout for the impending Fed hikes and other political situations around the world, as these seem to be the major factors in the rise and fall of world currencies. That is the latest currency news – Wednesday.

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