Inflation risks back under the spotlight

The US presidential election was, unsurprisingly, the big story this week. Now that the dust has settled, Donald Trump is set to be the next US President, with the Republicans completing a sweep of both the House and the Senate. Putting that all together, there seems to be little stopping Trump from implementing his policy ideas. From an FX perspective that means increased fiscal spending, tariffs, and tighter immigration rules. This should see US growth exceptionalism sustained, albeit accompanied by upside inflation pressures and higher rates. Given this backdrop it is unsurprising to see the dollar end the week higher – if anything we think the election result warrants a stronger rally for the greenback.

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Author: 

Nick Rees, Senior FX Market Analyst

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