By Tom Westbrook
Tom Westbrook’s view of the day ahead in European and global markets
Markets are looking to the first hours of Donald Trump’s presidency to set the tone for his second term. US markets are closed for Martin Luther King Day, so the immediate focus will fall on foreign exchange markets and stock and bond maturities.
Often, market performance during presidential terms returns to more reliable relationships with economic trends, but Trump tends to introduce volatility and has signaled bold policy changes.
He is the first president since Grover Cleveland in the late 1800s to serve two consecutive terms, and his return is met with extreme trepidation in the markets.
With the dollar falling to multi-year highs in recent weeks, traders are wondering if it could sustain a pullback if Trump moves slowly. They also question whether the tariffs are actually dollar positive or not.
The dollar fell in cautious Asian trade.[FRX/]
Investors have been selling bonds and buying dollars since mid-September, expecting not only that Trump will boost growth but also that his desire to raise tariffs, cut taxes and crack down on immigration could fuel inflation.
He said he would sign nearly 100 executive orders within hours of taking office and, at a rally Sunday, reiterated his pledge to deport immigrants, cut regulations and free up energy sources. On Friday, he had an apparently friendly phone conversation with Chinese President Xi Jinping.
Trump will be sworn in at noon ET (17:00 GMT) inside the rotunda of the Capitol building, with cold weather forcing the proceedings indoors for the first time in 40 years.
Trump underscored his unpredictability by saying he would “save” the Chinese social media app TikTok, which has been shut down in the US on national security grounds by a law that took effect on Sunday.
He also launched a digital token on Friday, which initially soared before sinking somewhat after his wife Melania Trump launched a separate token, and even some seasoned crypto investors began to feel uneasy about the speculative surge.
which has risen more than 45% since Trump’s election, fell about 3% to $101,800 in another possible hint that many expectations are already well priced into the market.
Key events that could affect the markets on Monday:
– Donald Trump’s presidential inauguration
(Author: Tom Westbrook; Editing: Edmund Klamann)
