The Trump Transition and the US Dollar

The countdown continues, as now only three days remain until Donald Trump becomes the 45^th President of the United States. Although there continues to be many uncertainties as to what this new administration will accomplish, Trump’s “hands on” leadership style is beginning to emerge. We are witnessing his unique methodology even before he takes the oath of office.

How Trump Views US Dollar Strength

In an interview with the Wall Street Journal, Trump said that the US dollar was, “too strong.”  “Our companies can’t compete with them [Chinese companies] now because our currency is too strong. And it’s killing us.”

At the same time, we are also beginning to see his senior advisers advance his message and ideology. Anthony Scaramucci, who will become a White House senior adviser in three days, spoke at the World Economic Forum today and cautioned about the downsides of a stronger US dollar. According to Reuters, he said it could make it tough for the President-elect to deliver on a promise of a revitalization for the US economy.

“We need to be careful about the rising currency, not just because of what is going on internationally but it will have an impact internally to the United States as well.”

A Year for Gold to Shine as the US Dollar Drops

Since January 3, traders have witnessed a roughly 3% decline in the value of the US Dollar Index. At the same time, we have seen gold prices rising dramatically, moving from approximately $1143 at the beginning of January to $1215 per ounce currently.

We are certainly beginning to see a major shift from bearish to bullish market sentiment in regards to gold prices. More so a continuation of US dollar weakness will provide a long-needed tailwind. This would be a key difference from last year’s dramatic US Dollar Index rise, and could certainly add to the current upward momentum we are witnessing in gold prices.

Wishing you as always, good trading,