USD: What will happen under Trump rule? (Credit Suisse)

Credit Suisse analyses the effects on the forex of Trump's policy on the USD.

"Trump's victory clearly has the potential to create major long-term changes on the forex. In its most extreme form, a US isolationist policy can be a source of uncertainty.

For us, a Trump victory suggests a strengthening of the USD against currencies like the MXN and CAD, and a weakening against defensive currencies like the EUR, CHF and JPY.

These questions are, however, complicated by the fact that the Republicans won not only the presidential elections, but also the Congress and the Senate. This leaves room for markets to see the glass half full and instead focus on the possibility of fiscal stimulus, tax reforms and other pro-growth policies.

This line of thinking has dominated recently and allowed for a strong rebound in equities and US rates that favoured the rise of the dollar on the forex."