Market Highlight 21.01.2025
The USD Index dropped by over 1,2% yesterday - its steepest daily fall since late 2023 - following Donald Trump’s official swearing-in as the 47th President of the United States. In his inaugural address, President Trump emphasized immigration, energy, and foreign policy more than tariffs, prompting the market to anticipate that trade tensions between the U.S and major partners might be more contained during his second term. Nevertheless, the President plans to direct federal agencies to review trade policies and economic relationships with China as well as neighboring North American countries. In particular, he is expected to focus on China, Canada, and Mexico, reevaluating compliance with the United States - Mexico - Canada Agreement (USMCA) and the 2020 trade accord with China. Currencies of countries perceived as potential targets in U.S trade policies rebounded significantly on Monday: the EUR rose 1,4% and the CAD advanced 1,2% against the greenback. Meanwhile, the Japanese yen climbed 0,4% to $155 on expectations that the Bank of Japan could raise its policy rate at its meeting this Friday. Market consensus still points to the Federal Reserve pushing back its next rate cut until June or July and implementing only one cut this year.
The USD/VND interbank rate briefly slipped to 25.280 during Monday’s morning session - pressured by heightened VND demand ahead of the Tet holiday - before recovering to 25.325 by day’s end. This downward pressure on the exchange rate may gain momentum following the USD’s sharp global decline last night. The rate is forecast to soften toward the 25.200 - 25.250 range today.
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