US: Economists Warn That Trump's Agenda Will Spur Inflation, FT
A new report from the Financial Times found that: “Surveys of more than 220 economists in the US, UK and Eurozone on the economic impact of Trump’s return to the White House showed most respondents believed his protectionist shift would overshadow the benefits of other elements of what the president-elect has dubbed “Maganomics”.”
- FT adds: “Many economists in the US, who were polled jointly by the FT and the University of Chicago’s Booth School of Business, also believe a new Trump term will spur inflation and lead to more caution from the Federal Reserve on cutting interest rates.”
- Şebnem Kalemli-Özcan, a professor at Brown University who also sits on the New York Fed’s economic advisory panel, said: “Trump’s policies can bring some growth in the short term, but this will be at the expense of a global slowdown which then will come back and hurt the US later on. His policies are also inflationary, both in the US and the rest of the world, hence we will be moving to a stagflationary world.”
Figure 1: Economists’ Expectations of Trump Administration's Policies on Economic growth in the US, Eurozone and UK
Source: FT, Survey of 222 economists in the US, UK and Eurozone by the FT and the University of Chicago’s Booth School of Business
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EURUSD TECHS: Monitoring Resistance
- RES 4: 1.0937 High NOv 5 / 6 and a key resistance
- RES 3: 1.0825 High Nov 7
- RES 2: 1.0739 50-day EMA
- RES 1: 1.0597/98 High Nov 29 / 20-day EMA
- PRICE: 1.0513 @ 16:49 GMT Dec 3
- SUP 1: 1.0425/0335 Low Nov 26 / 22 and the bear trigger
- SUP 2: 1.0311 1.382 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 3: 1.0258 1.500 proj of the Sep 25 - Oct 23 - Nov 5 price swing
- SUP 4: 1.0201 61.8% retracement of the Sep 28 - Juk 18 bull leg
A key short-term resistance in EURUSD at 1.0598, the 20-day EMA, remains intact. Monday’s move lower reinforces the short-term importance of this resistance. A clear break of this average is required to signal potential for a stronger recovery. This would open 1.0739, the 50-day EMA and allow for a continued unwinding of the oversold trend condition. The medium-term trend direction is down. The bear trigger lies at 1.0335, the Nov 22 low.
FOREX: USDKRW Soars on Martial Law Headlines, USDJPY Briefly Slides Below 149.00
- The main talking point for global currency markets on Tuesday was centred around the declaration of Martial Law in South Korea by the President, and the resulting KRW weakness. USD/KRW spot and NDF outrights are off the highest levels, but remain around 1.75% higher on the session following the news.
- USD/KRW spot's intraday high at 1,444.65 intersects well with the mid'22 high, suggesting strong resistance at this level - a rally through here could accelerate today's price action.
- The government statement provided reassurances that "unlimited" liquidity is to be provided to markets if needed and further meetings between the finance ministry and the central bank are scheduled in the coming hours.
- In G10, the USD index traded moderately lower on Tuesday, declining around 0.20% ahead of the APAC crossover. Most major pairs have had limited daily adjustments, although USDJPY volatility has remained in focus, with the pair briefly sliding to a new 7-week low of 148.65.
- Stronger than expected US Jolts job openings halted the USDJPY decline and assisted the recovery to current spot levels around 149.25. The quits rate data were notable in the release, lifting from 1.95% to 2.09% for the highest since May and its first monthly increase on a rounded basis since May 2023.
- With divergent monetary policy paths clearly weighing on USDJPY in recent weeks, Friday’s US employment report remains the next focus, as well as wage data from Japan. On the downside, 148.17 support is next, the 50% retracement of the Sep 16/Nov 15 rally.
- Australian GDP headlines the overnight calendar on Wednesday, before the focus turns to US ADP and ISM Services PMI data.
US: GOP To Pass Reconciliation Bill Within 30 Days Of Trump Presidency, Thune
Incoming Senate Majority Leader John Thune (R-SD) "laid out an ambitious timeline" for budget reconciliation during a five-hour all-conference Republican policy retreat today, according to Punchbowl News.
- Thune said he wants to pass a non-tax reconciliation bill within the first 30 days of the Trump administration, referring to the manoeuvre by which the party in control of Congress can pass legislation without support from the minority party.
- Thune said that the first reconciliation package will be focused on border security, defence, and energy. Republicans are confident it will survive the Byrd Bath - scrutiny from the Senate Parliamentarian to ensure the bill only relates to government spending - because they believe Democrats expanded the scope of reconciliation with the Inflation Reduction Act and American Rescue Plan. The early move on a border security and energy bill will give Republicans time to complete the more complex tax-focused reconciliation package.
- Thune also told reporters that Fridays will be voting days and votes will no longer be held open indefinitely, according to Punchbowl.
