The DXY index, which tracks the performance of the US dollar, showed that the currency reached 107.06 last week. It hit an all-time high days after Donald Trump reclaimed the presidency against his Democratic rival, Kamala Harris. However, the currency dipped to a weekly low on Wednesday and is trading at the 106.65 mark.
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The brief dip came after Trump’s nominees made the rounds in the media calling them ‘disrupters’. While the right-wing is finding the candidates apt for the job, the liberals remain unhappy with the selections. The markets surged after Trump won the presidency and things are beginning to cool down post the rally. The US dollar has slowed down this week as investors are awaiting key picks in the Trump cabinet.
Trump’s picks for cabinet posts face criticism as it is alleged that the appointees are being hired through personal ties and not through experience. The development made the US dollar briefly dip as plum roles are being awarded to his staunchest allies and supporters.
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Trump: US Dollar & the Russia-Ukraine War
The Russia and Ukraine war is a dark cloud that’s hanging across the US and the global economy. It could affect the prospects of the US dollar if the conflict is not brought under control. A new escalation will only send the markets tumbling and dampen the optimism the market recently generated.
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The Russia-Ukraine “fears have died back but the market will be sensitive to any renewed news or any fresh news on that front”, said the Head of FX Strategy at Rabobank, Jane Foley to Reuters. This puts the DXY index in the spotlight as Trump has vowed to protect the US dollar at all costs.
“The ‘Trump Trade’ that boosted the greenback is facing challenges from Trump’s controversial cabinet nominations and the escalation in the Russian-Ukraine war,” wrote DBS strategists in a client note. Therefore, Trump’s ability to solve the Russia-Ukraine conflict will decide the future of the US dollar’s prospects.