US Dollar on the backfoot ahead of Trump's inauguration

LONDON (January 20) The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades softer and flirts with a break below 109.00 on Monday ahead of President-elect Donald Trump’s inauguration as the 47th President of the United States (US). Several asset classes in the US will remain closed, such as the Wall Street trading floor and US bond trading, in observance of Martin Luther King’s Day. This means erratic moves could occur in a market with thin liquidity. 

All eyes will be on the aftermath of the inauguration, where President-elect Donald Trump has already confirmed in a rally on Sunday that a whole battery of new measures and executive orders will be issued. The main ones are, of course, more tariffs, mass deportation starting in Chicago, and issuing state of emergencies for energy and border security, Bloomberg reported. By issuing those last two, the upcoming President Trump can give the green light for massive drilling and mass deporting illegal immigrants without having to pass through Congress and the House of Representatives. 

Daily digest market movers: Expect headline risk ahead

• At 17:00 GMT, the Presidential Inauguration will take place, with Donald Trump being sworn in as the 47th President of the United States.
• Due to Martin Luther King’s Day, several trading floors in the US will remain closed throughout the day. 
• Equities are taking a turn and are becoming red with minor losses for European indices and US futures. There will be no cash trading this Monday for the Dow Jones and other major US indices. 
• The CME FedWatch tool projects a 55.6% chance that interest rates will remain unchanged at current levels in the May meeting, suggesting a rate cut in June. Expectations are that the Federal Reserve (Fed) will remain data-dependent with uncertainties that could influence inflation during President-elect Donald Trump’s term. 
• The US 10-year yield is trading around 4.627% and will remain at that level this Monday, as bond trading in the US is closed due to the Martin Luther King’s bank holiday. 

FXStreet