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Dollar at critical juncture ahead of US inauguration

Just a couple of days before Donald Trump’s inauguration as US president, the dollar is on a modest rebound but still generally under pressure amid a pullback that has been in place since the beginning of the new year. The dollar’s initial reaction to Trump’s November election was highly positive due in large part to expectations of higher US economic growth and interest rates under the new administration. The start of 2017, however, has begun to bring some doubts about Trump’s policy implementation and the possibility of trade wars resulting from his highly protectionist trade stance.

US Presidential Election: Potential Market Impacts

After 1) a first presidential debate in which Hillary Clinton was seen to have secured a major win over Donald Trump, 2) a vice-presidential debate where the Republican ticket gained back some ground with its supporters, 3) a scandalous revelation regarding a lewd tape of Trump’s self-professed “locker room talk” years ago, 4) a second presidential debate with mixed results for both Clinton and Trump, 5) a withdrawal of support for Trump by some prominent Republicans like House Speaker Paul Ryan, and 6) a release of additional hacked Clinton emails that could further damage the Democratic ticket, Clinton appears by most accounts to be leading the race with an increasingly wider margin.

FOMC Preview: The case for a hawkish surprise

Last week and this week mark an unusual confluence of central bank meetings; Already this month, we’ve heard from the Bank of Canada (on hold), Reserve Bank of New Zealand (cut rates to 2.25%), European Central Bank (enacted a suite of easing measures), and Bank of Japan (on hold) and before the week’s out, traders will get the latest updates from the Federal Reserve, Bank of England, and Swiss National Bank (all of which are expected to leave policy unchanged, though the SNB meeting could be interesting as we noted yesterday).

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