How Trump Influenced the Forex Market in 2019

The year 2019 was a wild one for the global stock market as well as the Forex market. During this year, a lot has happened between the world’s two most powerful economies – the U.S. and China. 

Last year, the two economic powerhouses slammed each other’s tariffs on consumer products, creating chaos on financial markets. U.S.— President Donald Trump, regarded as a very outspoken leader, has repeatedly called on China to commit trade abuses. China, on the other hand, has warned that it wouldn’t back down. The US-China trade tension is still ongoing, and both countries are working together to come up with a deal that’s beneficial for both parties. 

Indeed, the presidents of both countries have demonstrated just how influential they are across the globe. But we’re going to concentrate for discussion purposes on US President Trump and how he had an influence on the world’s largest market in 2019.

Donald Trump’s Tweets

There came a time when market experts and finance analysts believed that a deal could be reached soon between the two economic giants. But President Trump surprised everyone when he announced on his personal Twitter account that he’s placing additional 10 percent tariffs on Chinese consumer goods amounting to $300 billion. The announcement caused havoc on the global market, particularly the Forex market. This prompted best forex brokers in usa 2020 to warn their clients to practice due diligence, as the market was expected to be volatile. 

As the US leader’s tweet quickly went viral, traders and investors from around the world transacting in different markets like those of stock and currency experienced intense uncertainty. 

Impact of Trump’s Tweets on Financial Markets 

Significant U.S. stock market indices declined after Trump’s announcement, with Dow Jones Industrial Average shedding 280 points. S&P 500 lost 0.9 percent, while the NASDAQ suffered a 0.8 percent decline.

Meanwhile, the Forex market suffered as well. Currencies pegged to the US dollar were mixed up on the trading session. The EUR/USD, the most traded pair in the world, increased by 0.09 percent. In the negative, GBP/USD closed 0.23 percent. Both USD/JPY and USD/CHF dropped by 1.30 percent and 0.37 percent respectively. To aid their clients, brokers made sure to assist them, updating them regularly on the latest news surrounding the trader war between the U.S. and China. Forex brokers scrambled to warn clients that the market would experience extreme volatility.

Due to market uncertainty faced by traders and investors with trading major stocks and currencies, many shifted their focus to save-haven assets like gold.  

Another important thing to remember is when the Federal Open Market Committee or the FOMC, a day before Trump’s surprise announcement on Twitter, had a meeting and decided to lower the Federal Funds Target by ¼ point. 

Furthermore, President Trump added more fuel to the tension when he decided to put Chinese companies on a blacklist that prohibits them from importing technology components from the U.S. The blacklist includes Chinese tech giant Huawei which Trump perceived as a national security threat. The US president accused the Chinese government of using Huawei to spy on other countries and foreign firms. China and Huawei strongly denied the allegations. 

China, on the other hand, had also slapped the U.S. with more tariffs on consumer goods, showing no signs of backing down. 

The trade war is ongoing, and what we can only hope at this point is for the U.S. and China to reach a deal sooner than later. 

Trump style

U.S. President Trump truly is an influential leader. With just a single tweet last year, he was able to shake the financial markets. The Forex market, in particular, experienced extreme volatility numerous times in 2019, which forced Forex brokers to adjust necessary measures to aid their clients.

Forex traders and brokers should always have their minds ready and prepared for any market volatility when Trump makes any surprising announcement. This is why it’s important to regularly update your trading plan. Also, staying updated on the latest news and happenings at the Forex market will help you better prepare for your trading activity. 

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