Dollar bulls need more detail from Trump: Strategist

A fake dollar bill with US Republican presidential candidate Donald Trump's picture on it is displayed for sale with other electoral items at a roadside stall as pedestrians walk past in New York.
Jewel Samad | AFP | Getty Images
A fake dollar bill with US Republican presidential candidate Donald Trump's picture on it is displayed for sale with other electoral items at a roadside stall as pedestrians walk past in New York.

U.S. President Donald Trump needs to be clearer about his fiscal policies so one can better understand what may happen to the U.S. dollar, a currencies strategist told CNBC on Wednesday.

"I think the dollar is already coming off its post-Trump honeymoon period," Jane Foley, head of forex strategy at Rabobank, told CNBC.

"What could potentially give the dollar bulls a little bit more of headway is if he were to bring out some more detail about his policies, what is he going to do about fiscal stimulus, how is he going to lower corporate tax," Foley said.

The U.S. dollar index was down 0.2 percent on Wednesday. It registered a bullish trend since President Donald Trump was elected on hopes that the new administration would foster economic growth. But since Trump's inauguration, investors have not received details on how his plans to cut taxes and provide fiscal stimulus will work.

"The market needs some more meat on the bones of reflationary policies if the dollar bulls are going to get another go," Foley added.


In Europe, the uncertainty surrounding Brexit should make 2017 a very volatile year for the sterling.

The pound was moving higher on Wednesday. According to Foley, the recent relief rally in sterling is because the British government has shown more concrete signs that it has a plan for the country's exit from the EU, but once the negotiations with Europe begin such relief may disappear.

"(U.K. Prime Minister) Theresa May, I think, has been advertising what a busy schedule she's got," Foley also noted. The prime minister is visiting the U.S. on Friday and has mentioned plans to go to China.

"But of course, the negotiations for Brexit are yet to commence with European partners. So, I think once Brexit is triggered … we've got a volatile year ahead really," Foley said.

On the other hand, the euro should see some more relief, given that markets priced in "quite a lot of risk", Foley added.

"Whilst the far right is likely to get more support in the three countries that have general elections this year, they're not likely to form a government, so actually I think there's been a bit of relief coming back in the euro.

"They're certainly could be room for relief rallies on those election results and not only that but since the start of the year we've had some better-than-expected German and other European economic data, which of course has started this debate about whether or not it's appropriate for the ECB to be doing so much easing," she noted.