Central Banks in a Holding Pattern

Just like an airplane circling the airport, global Central Banks are in a holding pattern as they wait and assess the effect of policy implementation and the leadership style of President Donald Trump.

Both Mario Draghi and Janet Yellen have indicated that the most prudent move is patience. The uncertainty factor has been growing as America’s new administration begins to address campaign promises and commitments while implementing policies to bring these ideas to fruition.

As such, Central Banks are waiting to gain more insight and a tangible understanding of the economic repercussions that will emerge from America’s dramatic upcoming policy changes.

Be Careful What You Wish For

One of the recent statements made by President Trump was that he would be a president that does what he promises. Based upon his first few weeks in office, it is clear that he intends to do just that. Americans has waited a long time for a leader that would follow-through with their campaign promises.

The Uncertainty Factor Continues to Ramp-Up Exponentially

As we have said before regarding America’s new leadership, the only thing for certain is uncertainty. The fact of the matter is that very little time has passed since Donald Trump became our 45^th president. Even within this short period of time, there are factors that are absolutely evident and, for the most part, certain. The first certainty is that Donald Trump is our president, and his success is our success.

The second certainty is that these new policies will continue to deepen the divide that exists between political factions unless he unifies our country. A third certainty is that the Central Banks will proceed cautiously and not rush to change existing monetary policies without gaining a clearer understanding of the economic impact of America’s new administration. Lastly, the existing level of uncertainty will be a supportive factor for safe haven assets such as gold.

Wishing you as always, good trading,