USD: Waiting for details - Rabobank

The 'Trump Trade' was fully unleashed in the market this morning as evidenced across stocks, bonds, FX and crypto. For months the Trump trade has been based around the expectation that a second Trump presidency would hike tariffs, make tax cuts permanent and strip back regulation, all of which could boost US growth and inflation in the first instance, Rabobank's FX analyst Jane Foley notes.

USD is the best performing G10 currency

"Although its rally has already started to wane, unsurprising, the USD is the best performing G10 currency on a 1 day view this morning. The EUR is the worst performer among its peers. A second Trump Presidency raises an uncomfortable array of issues for Europe on issues around tariffs and defence and Ukraine."

"Too early to draw strong conclusions on the impact of Trump's policies and this is resulting in a reluctance by investors to extend the USD's rally for the time being. This afternoon, ECB President Lagarde has an opportunity to speak. The market will be watching whether ECB policy-makers view the US election result as likely to have a greater impact on European growth or inflation, though it is likely to be some time before this is clear."

"While it will take time before the markets have the information needed to develop a strong narrative on the impact of Trump's agenda on the international economy, the domestic inflationary impact of his policy does suggest a stronger USD through 2025. At the same time structural issues in Europe could weigh on the single currency medium-term. We will be publishing revised USD forecasts in the next couple of days."