US Dollar extends rally for second day in a row with Trump trade fired up

LONDON (November 12) The US Dollar (USD) sets forth its rally on Tuesday as the Trump trade adds another wave of US Dollar buying. The Greenback is crushing markets, steamrolling across the quote board against other major currencies. A goldilocks momentum is taking place with the US Federal Reserve (Fed) sticking to its interest-rate cutting cycle, while the rollout plan from President-elect Donald Trump is favouring equities due to prospects of stimulus and tax reduction packages once Trump takes office. 

The US economic calendar is rather empty this Tuesday in terms of data, with the numbers from the National Federation of Independent Business (NFIB) and from the TechnoMetrica Institute of Policy and Politics. Markets will rather focus on the batch of Fed speakers who will be speaking this Tuesday. After Fed Chairman Jerome Powell vowed that the Fed will remain data-dependent, a continuation of the rate-cutting cycle could fuel the current Trump trade rally in equities and the US Dollar even more. 

Daily digest market movers: Fed speakers to dampen hope?

• The National Federation of Independent Business (NFIB) Optimism index, which gauges sentiment among US small and medium-sized firms, came in at 93.7 in October, up from 91.5 a month earlier and beating market expectations.
• The TechnoMetrica Institute of Policy and Politics will release its Economic Optimism data for November around 15:00 GMT. A similar pattern as with the NFIB number is expected, ticking up to 47.3, from 46.9.
• Four Fed speakers are set to release comments to the markets: 
  • At 15:00 GMT, Federal Reserve Governor Christopher Waller delivers a keynote speech at the Clearing House Annual Conference in New York.
  • Around 15:15 GMT, Federal Reserve Bank of Richmond Thomas Barkin delivers a speech and participates in a moderated Q&A session at the Together Summit in Baltimore.
  • At 19:00 GMT, Federal Reserve Bank of Minneapolis President Neel Kashkari participates in a moderated conversation on "The Fed's New Focus" at the Yahoo Finance Invest event in New York.
  • Finishing off this Tuesday at 22:00 GMT, Federal Reserve Bank of Philadelphia Patrick Harker delivers a speech about Fintech, AI & the Changing Financial Landscape at the Carnegie Mellon University Lecture Series.
• Equities are giving back Monday’s gains, with European indices sinking near 1%. US Futures look bleak ahead of the US Opening bell. 
• The CME FedWatch Tool is pricing in another 25 basis points (bps) rate cut by the Fed at the December 18 meeting by 68.8%. A smaller 31.2% chance is for rates to remain unchanged. While the rate-cut scenario is the most probable, traders have pare back some of the rate-cut bets compared with a week ago.
• The US 10-year benchmark rate trades at 4.36%, up sharply after the bank holiday on Monday.  

FXStreet