Dollar Index Futures in Recovery after Election Shocker

November 9, 2016 2:34PM CST

Commodities futures markets are settling down after Donald Trump’s surprise victory in the U.S. presidential election in a move that many have likened to Britain’s decision to leave the Eurozone. U.S. dollar index futures are climbing back to earlier levels.  

The December contract in U.S. dollar index futures was up .47 percent at 98.315 in Tuesday’s mid-day trading and after closing at 97.86 on Monday night, ahead of the election results. The dollar rose in early North American trading as investors re-evaluated the impact of the victory of Republican Donald Trump in the U.S. presidential election.

The Brexit result was a real shock and created instability in the UK.  But this is a far bigger deal as this creates instability on a much wider, international scale. Analysts say the markets’ main concerns include Trump’s protectionist policies, focusing on potential trade wars with China – America’s largest trading partner – and with Mexico, it’s third largest.

U.S. dollar index futures had fallen 2 percent in the aftermath of Trump's win over heavily-favored – among commodities futures markets and equity markets alike - Democrat Hillary Clinton. However, despite a win from Clinton being viewed as the candidate who would leave a December rate hike on the table, some strategists say Trump's proposals and  promises to make U.S. companies operating overseas bring back more of their income to be taxed could be positive for the U.S. dollar index futures in the medium term.

The upward pressure would likely lead to the Federal Reserve raising U.S. overnight interest rates at a faster pace than it is currently projected to do

When Trump is sworn in as president in January, he will join a Republican majority in both houses of Congress, as the party retained control of both the Senate and the House of Representatives.

Other than Trump’s bombshell victory, U.S. fundamental news for commodities futures markets includes Wholesale Inventories for September, which rose 0.1 percent compared to economists’ forecasts of a rise of 0.2 percent. A 10-year Bond Auction is also slated for this afternoon at 12 pm CST.

Thursday brings the October Treasury Budget, while on Friday, the November University of Michigan Consumer Sentiment report is slated for release. Friday is expected to be a light-volume trading day in the commodities futures markets due to the Veterans Day holiday in the U.S. Treasury futures markets are closed.

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