Heading into the 2016 election, most pundits were decrying a Donald Trump presidency for what it would do to the stock market and the value of the dollar. But a day into the realization that Trump will be the next president and Wall Street seems to be shrugging him off — both from a stock market perspective and the impact he would have on the dollar against other currencies.
According to a report by Reuters, while it appeared the U.S. dollar was going to take a huge hit as the election played out, on Wednesday (Nov. 9), the dollar was at a loss of only a half a percentage point against the Japanese currency and was actually up against the euro and the franc. Even with big banks issuing warnings in London of the immediate risk to currency, none would alter their long-term forecasts, reported Reuters. “Medium to long-term implications are extremely difficult to assess because there is plenty of uncertainty about the extent to which Donald Trump’s program and pre-election announcements can be implemented,” analysts from Unicredit said in a note covered by Reuters. “[But] we are currently looking closely at developments and will likely put a number of our forecasts under revision.”
The report noted that predictions that the dollar would take a big hit were based on the thought that the impact of a Trump presidency on the markets would be so bad that the Federal Reserve would choose not to raise interest rates. But with stock markets recovering in trading Wednesday, that school of thought was quickly disappearing. “The Fed rate hike is back on, even with Trump in the White House,” Kathleen Brooks, head of research with brokers City Index in London, told Reuters. “Perhaps Trump’s conciliatory tone in his victory speech has eased concerns, or perhaps markets have no idea how to price in his victory as we have no precedent. Either way, a mere 24 hours ago, no one would have predicted such a calm market reaction.”