ING FX Asks Why Trump Is Making Everyone (Else) Great Again

With the USD now nearly 7% lower since Trump told the WSJ back in April that he thinks "our dollar is getting too strong", some - such as ING - have started to wonder if Trump's slogan, at least in the world of FX, wasn't MAGA but rather MEGA: Make Everyone (Else) Great Again. The bank's head of FX strategy, Chris Turner explains:

In the FX world, Making Everyone else Great Again is the new theme. Whether intentional or not, President Trump has certainly managed to keep his word on one of his pledges: concerns about a rising $ are no longer an issue for the administration, with even the Fed’s trade-weighted index now at its lowest in a year.


When it comes to taking stock of the dollar’s latest plight, we believe there are two things at play.


  • First, is the shifting view that the US economic cycle is beginning to top out given the absence of any major Trump fiscal stimulus – in effect making the somewhat rich US assets unattractive in the eyes of a global investor.
  • Second, is the idea of a political risk premium weighing on the dollar; while it may be slightly premature to conclude this, it is certainly one explanation for why USD crosses have sharply decoupled from interest rate differentials in recent weeks.


Indeed, this week’s US data will be a big test of the latter idea; in theory, we would expect the USD to move higher in line with US yields were we to see an all-round robust jobs report on Friday. Today’s ADP employment data may begin to whet the appetite for a $ recovery, while Fed talk – albeit by nonvoters Mester and Williams – could firm up expectations for the 2H17 policy sequencing of a start to the balance sheet run-off in Sep and a Dec rate hike. We like long $ short-term plays against AUD & NZD in the G10 space – where weak local stories, higher global yields and seasonality all supportive factors.


c2nnib2l Wed, 08/02/2017 - 07:21 Permalink

he wants weaker dollar, and other currencies to be stronger, so everybody is going to invest in US and buy from US and kill the US imports boost US exports  that's his logic 

mtl4 SethPoor Wed, 08/02/2017 - 08:08 Permalink

Frozenutz, master of the nothingburger....... The decoupling of the dollar from rates will be a serious issue since it may snap back with a vengence later likely going against what the current gov't would like to see.  All clear on the Euro for now but if something big hits (not if but when), watch out.

In reply to by SethPoor

aPlayer mtl4 Wed, 08/02/2017 - 09:14 Permalink

FX broker Tickmill was highlighting yesterday that retail traders have become extremely exhausted with long positions in USD which means that the markets should actually turn and dollar should strengthen a bit so that the retail crowd can initiate a short position in USD.

In reply to by mtl4

jtz5 c2nnib2l Wed, 08/02/2017 - 09:17 Permalink

Except that is the opposite of what he said as a candidate.  He said the US should have a strong dollar.  I voted for him, but he is 180 degrees from candidate Trump (strong dollar, stock market bubble, poor monetary policy, etc. etc.).  I am so tired of our political establishment.

In reply to by c2nnib2l

buzzsaw99 Wed, 08/02/2017 - 07:31 Permalink

fuckwit thinks we have a real market.  exchange rates are merely a policy tool slash momo play, just like everything else.  indicative of nothing.  they were all pretending the uk pound was moving on market fundamentals awhile back too i seem to remember.

Doom and Dust Wed, 08/02/2017 - 07:35 Permalink

If dollar weakness would be due to 'political chaos', the pound should be sinking with it.But it isn't, because the USD exchange rate has nothing to do with the political situation. Never has really.

peterk Doom and Dust Wed, 08/02/2017 - 08:01 Permalink

yes, correct.Its the exchange rate that controls the political situation! like the US dollar... its strength has allowed  the  never ending poloicy of WAR by the US around the golbe. If th US dollar were worthless, there would be no more US invasions for regime change. How many  poor countries make war?.. none.. they cant afford it.S lets make  america poor again... then there will be peace

In reply to by Doom and Dust

True Contrarian (not verified) Wed, 08/02/2017 - 08:02 Permalink

A rising tide raises all ships. Oh wait, that's Global Warming, I mean Climate Change, I mean Climate Disruption, I mean Climate (Insert here)

Hume Wed, 08/02/2017 - 10:07 Permalink

He wants to boost manufacturing jobs, and that means boosting exports, which requires a lower dollar.  The brits, euros, and Japanese have been seeing the benefits of a lower currency for a while. Our turn, as long as inflation is in check.