Trump's victory sees the US dollar skyrocket
Following the election of Donald Trump as President of the USA on the 6th of November 2024, the US dollar (USD) rose by approximately 1.65% against other currencies, including the Pound Sterling, euro and the Japanese yen.. [1]
On the 18th of November 2024, the Bank of Japan (BoJ) Governor, Kazuo Ueda, made his first comments on its monetary policy since the US election, leaving the door open to the possibility of another interest rate increase. The uncertainty around the interest rate hike saw the USD strengthen against the Japanese yen by 0.17%.[2]
Meanwhile, on the 25th of November, 2024, the US dollar traded lower after the news that Trump had nominated Scott Bessent as Treasury Secretary. Speculation of Mr. Bessent's appointment, which could lead to less disruptive trade policies, triggered a dollar 'correction' and recovery in European currencies.[3]
Pound Sterling: US Election and BoE interest rate cut
As the news of Donald Trump's election was announced to the world on the 6th of November of 2024, the Pound Sterling sank by 1.16% against the US dollar - its lowest level since August 2024. [4]
The Pound Sterling bounced back on the 7th of November 2024, rising against the US dollar following the Bank of England's (BoE) announcement that it will cut interest rates from 5% to 4.75%.[5]
Euro suffers worst drop against USD since Covid-19
On the 6th of November, before Trump won the US election, the euro suffered the worst drop against the US dollar since Covid-19, sending the currency to a four-month low. [6]
Meanwhile, on the 22nd of November 2024, weak HCOB preliminary composite eurozone Purchasing Managers' Index PMI data from France and Germany[7]– compiled by S&P Global - contributed to the continued weakening of the euro against the US dollar.[8]
AUD fluctuates: RBA interest rate decision and US tariffs announcement
On the 5th of November 2024, the Australian dollar strengthened following the decision by the Reserve Bank of Australia (RBA) to leave interest rates unchanged at 4.35%[9], indicating that rate cuts are unlikely.[10]
Meanwhile, within the context of Australia's reliance on the Chinese economy, the Australian dollar sank shortly after Trump's announcement on the 27th of November 2024 that reinforced hefty tariffs on imports into the US from China, Mexico and Canada.[11]
Falling oil prices weaken the Canadian dollar against the USD
On the 15th of November 2024, the Canadian dollar weakened to a 4 ½ year low against the USD as oil prices dropped and a wider gap between US and Canadian yields reduced the appetite for investors to hold the currency. The price of oil fell 1.4% to $67.73 a barrel, partially due to weaker demand from China.[12]
Japanese yen jumps against the dollar at the end of the month
On the 29th of November 2024, the yen increased in value against the US dollar as the market speculated that the Bank of Japan interest rate hike in December 2024 was more likely with the arrival of faster-than-expected inflation in Tokyo.[13]
Key dates – December 2024
- Piero Cipollone, Deputy Governor of the Bank of Italy speech (euro) – the 3rd December
- Releasing of AiG Manufacturing PMI data in Australia (AUD) – the 3rd December
- Releasing of ADP Employment Change & ISM Services PMI data in the US (USD) – the 4th December
- Bank of England Governor Bailey speech (GBP) – the 4th December
- Releasing of S&P Global CIPS Construction PMI data in the UK (GBP) – the 5th December
- Releasing of Bureau of Labor Statistics US unemployment rate data (USD) – the 6th December
- Reserve Bank of Australia announces interest rate decision (AUD) – the 10th Dec
- Bank of Canada announces interest rate decision (CAD) – the 11th Dec
- European Central Bank announces interest rate decision (euro) – the 12th December
- Releasing of S&P Global Flash manufacturing PMI data in US (USD) – the 16th December
- Office of National Statistics releasing of unemployment rate data in the UK (GBP) – the 17th December
- US Federal Reserve announces interest rate decision (USD) – the 18th Dec
- Bank of England and Bank of Japan announces interest rate decisions (GBP, Yen) – the 19th December
- Office of National Statistics releasing of retail sales data in the UK (GBP) – the 20th December
The contents of this article do not constitute financial advice and are provided for general information purposes only.
[1] https://www.bbc.co.uk/news/articles/c6246e3w935o
[2] https://www.reuters.com/markets/currencies/dollar-firms-against-yen-boj-leaves-open-timing-hikes-2024-11-18/
[3] https://www.currencynews.co.uk/forecast/20241125-41914_trump-expectations-dominate-the-pound-gbp-usd-bounces.html
[4] https://www.bbc.co.uk/news/articles/c6246e3w935o
[5] https://www.theguardian.com/business/2024/nov/07/bank-of-england-cuts-interest-rates
[6] https://www.euronews.com/business/2024/11/06/euro-suffers-worst-drop-since-covid-as-trump-set-to-win-us-elections
[7] https://www.reuters.com/markets/europe/euro-zone-business-activity-declines-abruptly-november-pmi-shows-2024-11-22/
[8] https://www.forexlive.com/news/euro-slumps-to-near-two-year-low-as-pmi-data-disappoints-20241122/
[9] https://www.theguardian.com/australia-news/2024/nov/05/rba-interest-rates-november-meeting-inflation-data
[10] https://news.torfx.com/post/2024-11-05_pound-australian-dollar-gbp-aud-exchange-rate-stumbles-following-rba-decision/
[11] https://news.torfx.com.au/2024-11-27_australian-dollar-falls-as-trumps-tariff-announcement-rocks-markets/
[12] https://www.reuters.com/markets/currencies/canadian-dollar-extends-weekly-decline-wider-yield-spreads-2024-11-15/
[13] https://www.reuters.com/markets/currencies/yen-surges-150-per-dollar-amid-growing-boj-rate-hike-bets-2024-11-29/#:~:text=NEW%20YORK%2C%20Nov%2029%20(Reuters,interest%20rate%20hike%20next%20month
