USD: A follow-up to performance since Trump's election – Commerzbank

In the months leading up to and following the November 2024 election, the USD performed similarly to how it did in 2016/17, i.e. before and after Donald Trump's first election as US President. The US dollar only appreciated significantly more against emerging market currencies eight years ago than at the beginning of this year because Trump's tariff policy focused much more strongly on these countries at that time, Commerzbank's FX analyst Michael Pfister notes.

No differences between Trump's first and second terms expected

"Six months have now passed, so it is worth repeating the analysis from back then. After all, the US dollar has depreciated quite a bit in recent months. However, this was not that unusual. Compared to 2016/17, the US dollar depreciated _much faster_ this time, but ultimately not more strongly. Similar to eight years ago, the depreciation of the US dollar has lost momentum over the last 30 days."

"One disadvantage of viewing this as an index against a large number of currencies is that, although it allows the idiosyncratic performance of the US dollar to be extracted, the performance of the individual currencies against the US dollar is lost. For example, the USD's performance could have been similar to eight years ago, but due to different drivers this time. The two figures below show that this was only partially the case. Among emerging market currencies, only the Mexican peso and Brazilian real stand out with significantly better performance compared to eight years ago."

"Despite the White House's erratic trade policy, the foreign exchange market does not seem to anticipate any major differences between Trump's first and second terms (at least so far). However, this is likely to change in the coming months. After hitting rock bottom eight years ago, the US dollar appreciated significantly. This time, such a recovery is likely to be more difficult, given the attacks on the Fed and the weakening real economy."