Election week may be over, but traders and investors still have their work cut out. The election of President Trump changes the financial landscape and market participants will have to bear this in mind over the next few years.
First things first: the US Dollar. The Greenback reacted strongly to the election result, gaining against major competitors to push the DXY up to 105. The Dollar has performed well over the past six weeks, in large part because of a higher interest rate compared to other currencies. The Federal Reserve has been unwilling to slash rates too aggressively because the US labour market has proven robust enough and inflation has been dampened enough to allow for less aggressive action. With Donald Trump at the reigns, the consensus is that inflation may increase again, which means the Fed will be even less inclined to cut rates. Nevertheless, the central bank continues to reiterate that all future decisions will be data driven, i.e. wait-and-see mode for now.
US stocks were certainly happy with the election result. The Dow and S&P 500 both gained an impressive 4.6% on the week and the Nasdaq Composite fared even better with a 5.7% weekly close. All three indices ended the week on record highs. Tesla (TSLA) rose a massive 29% last week thanks to both the result and a strong earnings report.
Cryptocurrencies took the news best of all. Bitcoin surged 17% last week following the result, dragging the rest of the market along with it. Total crypto market cap increased by almost half a trillion Dollars over the course of the week, bringing it to within closing distance of the 2021 all-time high.
In the immediate term, there is not a lot going on this week. Armistice Day in parts of Europe and North America will make for barren trading conditions this Monday. Tomorrow has equally little to offer in terms of tradeable events. Wednesday alleviates the boredom a little with US CPI data, before Jerome Powell delivers a speech the following day. Traders are probably grateful for the reprieve.
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