The Uncertainty Of US Fiscal Trading Policy And Its Effect On Forex Trading

On 21 January, Donald Trump was inaugurated as the president of the US. Though Trump has been lauded as the most ‘business focused’ president, this has not hitherto materialised in definite fiscal policies. As such, there has been a climate of uncertainty amongst Forex traders and this has materialised in a sense, since January 21st, that the dollar may be at risk.

Why might the dollar be at risk?

The uncertainty about the Trump administration’s fiscal policy has led some traders to worry that this could destabilise the dollar. Often all that it takes is a lack of confidence in the dollar for it to start to fall as traders turn to other markets and currencies as securer forms of investment.

Nevertheless, online forecasts as of January 21 show a neutral outlook for the dollar. This could tip into a period of sustained growth if a concrete, positive fiscal policy is unveiled. But, if the climate of uncertainty continues, the outlook for the dollar could switch from neutral to poor.

The issue of ‘kneejerk volatility’

One important issue here is that it is difficult for online traders to form definite outlooks for the prospects of the dollar. This has led some commentators to suggest that there may be a possibility of considerable ‘kneejerk volatility’ where traders make unpredictable decisions because they quite simply do not know where the markets will go in the future.

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