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Despite having criticised the use of executive orders in the past, Trump has gone on to sign the most of any post-war President: a total of 32.
Saturday April 29th marks the 100th day of Donald Trump’s US presidency. Regardless of your opinion of the Republican billionaire, there is no doubt the beginning of his term has been an eventful one.
He has withdrawn the US from the Trans-Pacific Partnership (TPP), been defeated in the Supreme Court over a bill dubbed the ‘Muslim ban’, approved two major oil pipelines shot down by the Obama government, and ordered a review into the relationship between the US and its trading partners.
USD/GBP peaked at its highest level in over a decade of £0.8317 on January 16th as institutions including the International Monetary Fund (IMF) and the World Bank claimed Trump’s economic policies would boost US growth.
But Trump quickly sent investors fleeing from the US dollar after calling it overvalued on January 17th. He did so again on Wednesday April 12th. The second time, losses were exacerbated by Trump also claiming he supported the Federal Reserve in keeping interest rates low.
It’s not just Trump who has dictated which of his campaign pledges will go unfulfilled. So far the Republican has been thwarted in his attempts to repeal Obamacare, after a replacement healthcare bill failed to win enough support within Trump’s own party to make it through Congress.
Concerns this could be the start of a series of thwarted campaign pledges undermined some of the previous strength in USD exchange rates.
Up until that point, the US dollar had been supported by hopes that Trump would soon debut his radical tax and spending plans. The belief that they could give the US economy a shot in the arm kept the currency buoyed during the many scandals that have gripped the White House in the past 100 days, but optimism has taken another severe knock recently.
Trump tweeted over the weekend that he would be revealing his plans for tax reforms the following Wednesday. Markets were excited to see what Trump would come up with, especially when it was confirmed that one aspect of the tax reforms would involve slashing corporation tax from 35% to just 15%.
However, when the document was revealed on Wednesday, traders were disappointed. The entire bullet-pointed document was less than 250 words and many economists were quick to state that they could not model the impact of the reforms upon the economy because there was little detail to go on.
The US dollar has continued its recent decline, falling to its lowest level against the pound ($0.7748) since the beginning of October 2016 and remains around its worst rate versus the euro (€0.9132) since November 10th 2016.
Whether the US dollar strengthens or weakens in the coming weeks will largely depend upon whether Trump manages to solidify his tax and spending plans and take solid action to implement them. One thing’s for certain however, if the next 100 days of Trump’s presidency are as dramatic as the last, the US dollar could be in for a wild ride over the summer.
He also continues to talk tough on trade, so if he were able to renegotiate the North American Free Trade Agreement (NAFTA) in the US’ favour, this would further boost the US dollar.
But, as we have seen, trader confidence in the new US President is quickly evaporating. Markets are starting to realise that what Trump does and what he promised may not be the same thing and this is causing them to reassess their valuation of USD.
It looks set to be an interesting next 100 days.
