USD: Trump lack of details shifts focus to Fed – MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the dollar looks set to advance further from here with the speech to Congress by President Trump now behind us and with the focus now shifting to the Federal Reserve and monetary policy ahead of a speech on Friday by Fed Chair Yellen and then the FOMC meeting on 15th March.

Key Quotes

“We believe the key take-away for the markets from the speech is not the fact that it lacked detail on policy – that was never likely – but that President Trump was far more conciliatory which raises the prospects of a more productive relationship between the White House and Congress. On policy Trump highlighted the repeal of Obamacare, a USD 1trn infrastructure spending program, tighter border security and increase defence spending suggesting from the reflation policy angle anyway that infrastructure spending may get greater focus than say the tax reform program which has many facets to it. Certainly from the perspective of working with Congress, an infrastructure spending program would have much greater bi-partisan support than would a tax cutting program.”