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How Will Trump’s Inauguration Affect the Markets Tonight?

After Donald Trump’s inauguration, the dollar is expected to face some difficulties. Although historical examples show that the dollar typically appreciates slightly between the elections and inauguration, forecasts suggest that after this period, stagnation or even a decline might be observed. The dollar’s vulnerability is exacerbated by extended long positioning, with speculators holding the highest level of long positions in the past eight years. This could lead to corrections in the value of the dollar, especially if profits are realized from the already held long positions. Moreover, Trump’s policies, such as higher tariffs and a focus on “America First,” may exert additional pressure on the dollar’s value.

Stocks are also expected to experience significant volatility during the transition period. Historically, they often face disappointments in the months following an inauguration, as the initial optimism of the transition gives way to more realistic assessments. There is a risk of stock prices declining, especially given stretched valuations and high ownership, which makes them more vulnerable. Furthermore, gold, which typically sees a drop after elections, has managed to remain relatively stable this time and is likely to continue receiving support for a few months after the inauguration.

After Trump’s inauguration, we can expect significant volatility in the crypto markets, with traders closely monitoring any statements from him related to cryptocurrencies. If Trump fulfills his promises and signs executive orders, this could lead to another rise in Bitcoin and other cryptocurrency prices, potentially triggering increased trading and volatility. However, if these measures fall short of market expectations, a correction in prices and profit-taking could occur, especially in smaller cryptocurrencies that are more sensitive to investor sentiment. The market liquidity will still be affected by the U.S. holidays, keeping activity lower at the start of the week. Nevertheless, Trump’s coin could be a factor in attracting new investments and drawing attention to the market.

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