The dollar was back on the ascendancy after reaching a seven-week low earlier in the week, post the Supreme Court Ruling on parliament’s role in triggering Article 50. The dollar was supported by a better global appetite and more stable global stock markets, with the Dow Jones Industrial Average reaching its highest point above 20,000 for the first time in its history.
The Trump effect on ‘reflation’ was the primary driver of this latest move, as short-term interest rates on bonds turn positive. Trump’s promise of renewed public spending helped buoy this latest move, but the US dollar remains on tenterhooks as other parts of his policy making raise eyebrows amongst investors. Future direction is very difficult to predict, but what is known is that the toxic mix of Trump’s public spending manifesto coupled with his controversial policies around the Mexican border and immigration are leaving investors in the dark around the direction the US dollar may take. Uncertainty equals volatility.