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US Dollar Unimpressed By First Trump State of the Union Speech

US Dollar Unimpressed By First Trump State of the Union Speech

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar unimpressed as Trump delivers as-expected SOTU speech
  • Infrastructure spending, workforce development top domestic agenda
  • Trade rules to be strongly enforced, deals to be “fair and reciprocal”

The US Dollar found little in the way of directional guidance from President Donald Trump’s first State of the Union Address. The benchmark currency remained confined to the choppy range carved out over the preceding 11 hours against an average of its major counterparts.

Commenting on domestic economic policy, Mr Trump called on Congress to pass a $1.5 trillion infrastructure-spending plan, with federal dollars to be matched by municipal and private sector contributions. He stressed that the plan must limit permit approval times to two years.

The President also presented a wish list of workforce development initiatives. He called on Congress to invest in vocational training and to support paid family leave. An unspecified initiative to boost job prospects for former convicts was also mentioned.

On trade policy, Mr Trump said that America has turned the page on decades of unfair deals. He told other nations they can expect strong rule enforcement and extolled trade relations that are “fair and reciprocal”. This closely matched comments made at the World Economic Forum in Davos last week.

The greenback’s muted response probably reflects the address’ limited offering of concrete policy details. Trump’s push for infrastructure spending was a major campaign promise and widely expected by the markets. Beyond that, the President stuck to already familiar and almost certainly priced-in rhetoric.

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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