USD: Views on direction remained mixed - ANZ

Con Williams, Rural Economist at ANZ, notes that the USD weakened overnight as views on USD direction remained mixed and seem to very much depend on the perceived policy mix Donald Trump’s new adminstration will be able to implement.

Key Quotes

“A “very major” border tax should theotorically be USD positive by encouraging more exports and less imports, but this is complicated by the USD’s reserve currency status and associated other functions (i.e funding, transactional etc) it provides for global commerce. It also depends on other policies that will be implemented alongside it – it may well make exporting more attractive, but market access could be reduced when renegotiating trade agreements.”

“More higher paying jobs could well open up, but what about the adjustment of tradable prices with the new tax and its hit to purchasing power for lower income households (assuming a higher USD doesn’t compensate).”