I was excited for commodity prices when Trump was elected because he openly tried to push it down in his first term. It has dropped since he took office but he hasn’t said much about it this time. I don’t know if he has a plan to push it down this time. What’s your prediction for 6-12 months out for the DX?
12 months out prediction....that might as well be 12 lifetimes away to an active trader. 12 months out is investing....and investing always goes up gently but surely like a turtle
USD is already down tonight. I guess the dollar rally lasted 1 day. Since Trump likes pissing everyone off the USD will keep going lower until the global recession comes and then it will skyrocket along with Gold.
Potential Impact of a Trump 2024 Administration on the U.S. Dollar Trade Policy Trump’s trade agenda – notably higher tariffs, aggressive trade negotiations and “decoupling” from China – has ambiguous effects on the dollar. On one hand, higher tariffs can be inflationary and push U.S. yields up, which would strengthen the dollarreuters.comchathamhouse.org. Indeed, many analysts note that tariffs on trading partners tend to cause those countries’ currencies to weaken (as seen when the renminbi fell ~10% in 2018), effectively boosting the USDchathamhouse.orgreuters.com. The combination of deregulation, tax cuts and tariffs is expected to stoke growth and inflation, keeping Fed rates higher for longer – a mix that “spells strength for the dollar”reuters.comreuters.com. For example, Reuters reports that investors assume Trump’s pro-growth agenda will lead to higher inflation and stronger growth, forcing the Fed to maintain high rates, which is bullish for USD demandreuters.comreuters.com. On the other hand, heavy tariffs and trade conflicts can hurt the U.S. economy relative to the rest of the world, which would weaken the dollar. Goldman Sachs forecasts that sweeping tariffs will slow U.S. growth and erode America’s “exceptional returns,” predicting a roughly 9–10% dollar decline against major currencies over 12 monthsgoldmansachs.comgoldmansachs.com. UBS and other strategists likewise warn that protectionist policies have already undermined confidence in the dollar’s safe-haven role, saying that rising trade tensions and debt have “chipped away at the dollar’s appeal”reuters.comreuters.com. A flood of tariff announcements has triggered fear of recession and a bid for other assets, leading foreign investors to pull back from U.S. stocks and bondsreuters.comreuters.com. In summary, trade policy could drive either outcome: tariffs may inflate U.S. rates (strengthening USD) or slow growth and shake confidence (weakening USD)chathamhouse.orgreuters.com. Fiscal Policy A second Trump term is likely to involve looser fiscal policy, such as extending or expanding the 2017 tax cuts and raising spending. Higher deficits could have mixed effects on the dollar. A surge in government borrowing might tend to depreciate the currency by increasing debt supply. However, markets expect tax cuts and spending to boost inflation and growth, which in turn could keep U.S. interest rates higher. Chatham House analysts note that “looser fiscal and tighter monetary policy tends to be a stronger currency”chathamhouse.org. In other words, if fiscal loosening fuels inflation without immediately expanding the economy, investors may demand higher yields on U.S. assets, supporting the USD. Reuters cites strategists who believe Trump’s policies will produce a “hotter economy” and higher inflation, both of which bolster the dollar’s appealreuters.comreuters.com. Yet fiscal expansion also risks large deficits. Some forecasters caution that net stimulus may be limited by Congress: Morgan Stanley expects few new tax cuts beyond those already enactedmorganstanley.com. If deficits remain huge, global investors may worry about U.S. solvency and seek diversification away from dollar assets (a phenomenon called de-dollarization). Goldman Sachs highlights that foreign central banks and investors have been reducing dollar holdings, and warns that prolonged U.S. deficits alongside aggressive tariffs could “crack the central pillar of the strong dollar”goldmansachs.comgoldmansachs.com. Thus, fiscal policy can be a double-edged sword: it may stoke inflation (pulling the dollar up) but also expand debt (pulling the dollar down). Monetary Policy President Trump’s comments suggest he prefers a weaker dollar (to boost exports) and has criticized Fed policies. In practice, however, the Federal Reserve’s stance will likely be driven by underlying economics. If Trump’s stimulus (tax cuts, spending) and tariffs push U.S. inflation above other countries’, the Fed may delay rate cuts. A growing U.S. yield advantage versus Europe and Asia is a strong dollar tailwind: JP Morgan notes that U.S. bond yields are already at their widest gap versus peers since 1994am.jpmorgan.comam.jpmorgan.com. Indeed, the dollar has recently rallied as markets expect a “cautious” Fed to hold rates higher than othersreuters.com. Citi projects the dollar would “rally” if Trump’s inflationary policies materializereuters.com. In short, if the Fed remains relatively hawkish, the dollar is bullish. Conversely, if Trump’s policies significantly slow growth, the Fed may cut rates faster. UBS expects that broad tariffs will weaken the U.S. economy, giving the Fed “much more room to ease” and prompting multiple rate cuts in 2025ubs.com. They forecast a sustained period of dollar weakness if that happens. In this view, a pivot to easier policy – plus uncertainty about U.S. policy – could erode the greenback’s safe-haven status. Reuters notes that sharp dollar drops have coincided with fears of tariff-driven recessionreuters.com. Thus, monetary policy is pivotal: hawkish real rates under Trump would strengthen USD, while easier money amid slowing growth would weaken it. Deregulation and Economic Growth Trump’s agenda includes broad deregulation (energy, financials, immigration) intended to spur U.S. growth. In theory, faster domestic growth attracts foreign investment and supports the currency. Many analysts assume the U.S. will again outpace other developed economies, reinforcing “U.S. exceptionalism”reuters.comam.jpmorgan.com. Indeed, JP Morgan notes that robust U.S. expansion and productivity could make a dollar drop “unlikely in the short term”am.jpmorgan.com. An improving U.S. economy would likely boost the dollar. However, the flip side is that growth gains from deregulation may be offset by losses from higher barriers. Even some bullish forecasts caution that tariffs and restrictive trade could “hurt economies abroad more” but ultimately backfire at home as costs risereuters.comreuters.com. If global investors perceive U.S. growth prospects as fading under Trump 2.0, they may rotate into foreign assets. UBS and others warn that declining confidence and portfolio inflows – once key supports for the dollar – could reverse if Trump’s policies disappointreuters.comreuters.com. In the end, if economic growth under Trump remains comparatively strong, it will be dollar-positive; if growth slows or uncertainty prevails, it could be dollar-negative. Expert Commentary and Forecasts Expert opinion is divided. Bullish views note that Trump’s expected policies are inflationary and pro-growth, which tend to strengthen the dollar. For example, Reuters cites analysts who say higher inflation and Fed rates “will be bullish for the dollar”reuters.com. Jefferies’ global FX head believes the dollar could rally another 5% if Republicans enact Trump’s agendareuters.com. Goldman Sachs strategists also admit that if tariffs did raise U.S. rates, that would bolster the dollar – but in practice they fear the net effect is oppositegoldmansachs.com. JP Morgan forecasts that with U.S. growth outpacing others and policy boosts to manufacturing and tariffs, the dollar’s strength “is expected to stabilize or persist into 2025”am.jpmorgan.comam.jpmorgan.com. In contrast, bearish views stress the risks of Trump’s trade wars and deficits. Goldman forecasts the dollar to fall roughly 9–10% against the euro, yen and pound over 2025 as tariffs drag on growthgoldmansachs.com. UBS argues the current weakness (dollar down ~6% in 2025 so far) could continue: higher tariffs, rising debt and slowing growth undermine the greenback’s appealreuters.comreuters.com. Macro strategists note that if U.S. yields come down faster (or foreign rates rise), the dollar could lose its safe-haven bid. In sum, forecasts range from modest dollar gains (e.g. Citi +3%) to significant losses (Goldman’s double-digit decline). Summary of Factors Affecting the Dollar Factors Supporting a Stronger USD (Bullish) Factors Supporting a Weaker USD (Bearish) Inflationary policies & higher U.S. yields: Trump’s tariffs, tax cuts and spending could boost U.S. inflation and keep Fed rates higher than peers, making U.S. assets more attractivereuters.comreuters.com. Trade war slowdown: Widespread tariffs and decoupling risk choking U.S. growth and real incomes, undermining U.S. “exceptionalism” and causing investors to flee dollar assetsgoldmansachs.comreuters.com. Fiscal stimulus: Expanded tax cuts and deregulation may stimulate the economy, lifting interest rates and drawing capital into dollarschathamhouse.orgreuters.com. Growing deficits and de-dollarization: Large fiscal deficits and deliberate foreign moves away from dollar reserves could reduce global demand for dollarsgoldmansachs.comreuters.com. Strong U.S. growth vs world: A resilient U.S. economy relative to Europe/Asia can keep the USD strong. JPMorgan notes U.S. growth (~2.7%) outpaces peers, likely keeping pressure on Fed cutsam.jpmorgan.com. Fed easing: If Trump’s policies slow U.S. growth (as many expect), the Fed may cut rates sooner than foreign central banks. UBS forecasts this would lead to a “sustained period of weakness” for USDubs.com. Safe-haven & geopolitical demand: Heightened global risk or policy uncertainty might keep investors in dollars. (Historically, crises have boosted the USD, and Trump’s tariffs have at times been accompanied by risk-off swings.) Loss of confidence: Persistent protectionism and political turmoil could erode faith in the dollar’s stability. Strategists warn that tariff-driven “anomalies” are changing the dollar’s role, even sparking talk of a crisis of confidencereuters.comreuters.com. Sources: Analysis is based on public statements and research from financial institutions and media: Goldman Sachsgoldmansachs.comgoldmansachs.com; UBSubs.com; JP Morganam.jpmorgan.comam.jpmorgan.com; Reutersreuters.comreuters.comreuters.comreuters.comreuters.com; Chatham Housechathamhouse.orgchathamhouse.org; Bloombergnews.bgov.com, among others. These sources present both sides of the debate on how Trump’s trade, fiscal, monetary and deregulation policies may impact the U.S. dollar.
Thanks for the suggestion. I’m trying to make some long term projections for the grain markets and I’ve been betting the dollar would fall. Just wondering if anyone has a compelling argument for the opposite.