Donald Trump, the 45th President of the United States, has been known to be a controversial figure in the world of politics. However, his impact on the financial markets, particularly on the USD forex rates, cannot be denied. Trump’s policies and public statements have a direct impact on the value of the US dollar. In this article, we will explore how Trump influences the USD forex rates.
Trade policies
One of the most significant ways in which Trump affects the USD forex rates is through his trade policies. Trump is known for his protectionist stance, which has led to trade disputes with some of the United States’ major trading partners, including China and Mexico. His trade policies, such as tariffs and trade barriers, have a direct impact on the USD forex rates.
For instance, when Trump imposed tariffs on Chinese goods, the Chinese government retaliated by imposing tariffs on US goods. This resulted in a decrease in demand for US goods, which led to a decrease in the value of the US dollar. The same thing happened when Trump threatened to impose tariffs on Mexican goods, which led to a decline in the value of the US dollar.
Interest rates
Another way in which Trump influences the USD forex rates is through his comments on interest rates. The Federal Reserve, which is responsible for setting interest rates in the United States, is an independent body. However, Trump has often criticized the Fed for raising interest rates, which he believes is harming the US economy.
When Trump made comments about interest rates, it led to speculation among investors about the future course of interest rates. This, in turn, affects the value of the US dollar. For instance, when Trump criticized the Fed for raising interest rates, it led to a decline in the value of the US dollar.
Fiscal policies
Trump’s fiscal policies also have an impact on the USD forex rates. His policies, such as tax cuts and increased government spending, have led to an increase in the US budget deficit. This has led to concerns among investors about the long-term sustainability of the US economy.
When investors are concerned about the sustainability of the US economy, they tend to sell off their US dollar holdings, which leads to a decrease in the value of the US dollar. This was evident when the US budget deficit reached a record high in 2018, which led to a decline in the value of the US dollar.
Public statements
Trump’s public statements also have an impact on the USD forex rates. His tweets, speeches, and interviews can cause volatility in the forex market. For instance, when Trump tweeted about the US-China trade war, it led to a decline in the value of the US dollar.
Trump’s public statements can also affect investor sentiment about the US economy. If investors perceive the US economy to be unstable, they may sell off their US dollar holdings, which leads to a decrease in the value of the US dollar.
Conclusion
In conclusion, Trump’s policies and public statements have a direct impact on the value of the US dollar. His trade policies, comments on interest rates, fiscal policies, and public statements can cause volatility in the forex market. As such, forex traders need to monitor Trump’s actions and statements closely to make informed trading decisions.
