As we discuss in more detail in FX implications of Trump's first 100 days, initial policy activism is like to focus on energy de-regulation and trade policy. Some of the most USD-positive aspects of Trump’s economic agenda, namely corporate and personal tax reform, as well as infrastructure spending need to be legislated by Congress and are unlikely to materialise until much later in 2017.
If initial policy action front-loads protectionism, the impact on the USD is likely to be at least mixed, with the USD likely to see most upside against the EM currencies and commodity exporters in the G10.
Some of the early aspects of the non-economic agenda, for example the repeal/replacement of the Affordable Care Act, would be a good indication as to whether Trump is able to successfully work with the Congressional leadership.
Towards the end of this week the markets will get a chance to at least partially refocus on the economic issues. Our economists expect Q4 GDP growth to slow to 2.1% QoQ annualised, in line with market expectations.
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