President Elect Donald Trump is already starting to have a significant effect on manufacturing with several car manufacturers back tracking on moving production abroad. Both Ford and Fiat Chrysler have announced significant investment into Michigan which Trump made a major part of his campaign. Currently the Detroit car show is taking place and there appears to be a general consensus that more car manufacturers will start to change their plans.
Donald Trump’s inauguration will take place in the next 2 weeks and if the current changes to the car industry are anything to go by a lot could start to happen. The first 100 hundred days of any presidency are heavily scrutinised and I would not be surprised if Trump’s bring the most major changes ever. Many economists and investors said the election of Trump would cause markets to crash but from a US Dollar perspective it’s at its strongest in years.
Future US Interest Rate Decision
After the Federal Open Market Committee raised interest rates before the end of 2016 there was talk that more hikes were coming. Once Trump’s in power, coupled with the boost that I believe he will bring to US industry it will not be long before there are further interest rate hikes.
If the US Federal Reserve were to hike 2 or 3 times in 2017 I would not be shocked to see the GBP/USD rate around the 1.10 level by the end of the year.
Hopefully over the next month it will become clear what the US Federal Reserve plans look like, however it’s no secret that Janet Yellen and Donald Trump don’t see eye to eye. Trump will be able to select who he wants to head up the FED and there could be a change in leadership. This may cause the market volatility but could bring Monetary Policy even more in line with Trump’s plans.