USD: Don't fight the trend – ING
12.11.2024, 10:15

USD: Don't fight the trend – ING

US equity markets continue to plough ahead. There is an emerging narrative that unlike in 2016, when Donald Trump was unprepared for office, this time around he plans to hit the ground running in January. To some degree that supports the extension of the Trump trades right now and tends to subdue the investment thesis that it will take his administration a year to deliver any major initiatives – as was the case in 2017, ING’s FX analyst Chris Turner notes.

New USD bull trend is rising

“What we have seen so far this week are early signs of active engagement in a new dollar bull trend. Traded levels of volatility are rising notably as it seems the market is actively positioning (investors) or hedging (corporate treasurers) in expectation of a stronger dollar. All we would say here is not to fight this emerging trend.

“Today we will see the October update of the NFIB small business optimism index. This is expected to remain off early-year lows and presumably could pick up over coming months on the Republican win and what it means for corporate taxes. And at 1600CET we have a speech from the Fed's Christopher Waller.”

“Presumably, he will follow Chair Jerome Powell's lead from last week and not get drawn into questions about how the Fed will react to Trump's proposed agenda. DXY has some resistance here at 105.70, but the highs of the year near 106.50 are very much in focus.”

 

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