20/01/2025 Daily Reports
As Donald Trump prepares to take office for an unprecedented second non-consecutive term, markets are poised for turbulence. With U.S. markets closed for Martin Luther King Day, global focus shifts to currency, stock, and bond futures.
The dollar, recently at multi-year highs, dipped slightly in cautious Asian trading, as investors speculate whether Trump’s policies will reverse its momentum. His plans to sign nearly 100 executive orders, deport immigrants, slash regulations, and revive energy production are fueling both optimism and uncertainty.
Trump’s unexpected moves, such as “saving” TikTok and launching a digital token alongside a competing token from Melania Trump, have amplified unpredictability. Meanwhile, his approach to tariffs and inflation remains a critical unknown for traders.
As he takes the oath in the Capitol’s rotunda under unusually cold conditions, markets and political observers alike are bracing for a bold, volatile start to this historic presidency.
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Dollar on Edge as Trump Returns to the White House
Dollar Faces Uncertainty
The U.S. dollar started the week on the defensive as markets braced for Donald Trump’s inauguration. Traders are keenly focused on his speech to gain insights into his immediate policies.
Yen Strengthens on BOJ Rate Hike Speculation
The yen held near a one-month high as markets bet on the Bank of Japan raising rates this week to levels not seen since 2008, signaling a historic shift in Japanese monetary policy.
Crypto Buzz Continues
Cryptocurrency investors await Trump’s executive orders aimed at reducing regulatory barriers and promoting digital asset adoption. Trump’s recently launched digital token surged before settling around $58.
Bitcoin Takes a Breather
Bitcoin traded slightly lower at $102,550 but remains up 80% since November, driven by optimism over crypto-friendly U.S. policies.
Mixed Outlook for the Dollar
While Goldman Sachs strategists foresee policy changes bolstering dollar strength, they warn of near-term volatility due to potential tariff announcements reminiscent of Trump’s first presidency.
Wait-and-See Mode
The dollar index edged lower to 109.16 but stayed close to its 26-month high, reflecting a cautious market ahead of potential rate cuts by the Federal Reserve and tariff-related risks.
Global Tensions Add to Uncertainty
Developments in the Middle East, including a ceasefire between Israel and Hamas, continue to capture market attention alongside economic data and central bank decisions.
What’s Next?
While markets remain optimistic about Trump’s pro-growth policies, the specter of tariffs, inflation risks, and geopolitical instability could unsettle the dollar’s recent gains.
Similarly, the BOJ’s potential rate hike may reflect growing confidence, but Japan’s fragile recovery raises questions about the sustainability of tighter monetary policy.
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