Donald Trump’s rise to the U.S. presidency was marked by a series of bold and unconventional policy proposals that many pundits deemed radical at the time. Given the length of the campaign and the public nature of his platform, one would think that the market had ample time to prepare and price in the potential policy shifts well in advance. However, it turned out that investors were caught off guard by the extent of the upheaval that ensued. The first 100 days of Donald Trump’s presidency were characterized by extreme volatility and uncertainty for global financial markets. This article reviews Trump’s policies and analyzes their consequences for the global financial landscape.
Introduction
Donald Trump assumed office on January 20, 2025, and market volatility has been rising ever since. His initiatives, particularly aggressive trade policies, sent shockwaves through equities, currencies, and commodities, leaving retail forex traders scrambling to adjust. Larger investors struggled to adapt to the rapid pace of proposed reforms and their far-reaching consequences. Overall, the first 100 days of President Trump saw heightened risk aversion and widespread uncertainty, resulting in sharp fluctuations in asset prices and currency exchange rates as traders reacted to every policy announcement, tweet, and speech from the new administration.
Major Currencies’ Performance Since Donald Trump Took Office
Source: Octa
Major Market-Moving Events
1. January 20: A Rocky Start
On Inauguration Day, the U.S. Dollar Index (DXY) dropped by more than 1.20% after news surfaced that the new administration would not immediately impose trade tariffs. This prompted a rally in the currencies of some U.S. trading partners, notably the Mexican peso (MXN), the Euro (EUR), and the Canadian dollar (CAD). Prior to this sharp decline, the greenback had been rising almost uninterruptedly since September 2024, nearing a three-year high as the market anticipated that higher tariffs would spur inflation, prompting the Federal Reserve to pursue a more hawkish monetary policy.
2. February 1-3: The Trade War Begins
Historians may label February 1 as the official start of a global trade war. On this day, Trump imposed a 25% tariff on imports from Canada and Mexico, along with an additional 10% tariff on China. The market’s reaction was highly negative, with U.S. stock futures slumping in early Asian trading on February 3. Nasdaq futures were down 2.35%, and S&P 500 futures fell 1.8%. U.S. oil prices jumped more than $2, while gasoline futures surged over 3%. The Canadian dollar and Mexican peso weakened substantially, with USDCAD surging past the 1.47900 mark, a 22-year high, and USDMXN touching a three-year high as economists warned that both countries were at risk of recession once the tariffs took effect.
3. March 3-5: Risk Aversion Takes Hold
As fresh tariffs on most imports from Mexico and Canada, along with 20% tariffs on Chinese goods, were scheduled to take effect on March 4, investors began to sell off the greenback and flock to gold (XAUUSD) and alternative safe-haven currencies like the Swiss franc (CHF) and Japanese yen (JPY). In just three trading sessions, DXY plunged by more than 3%, while the gold price gained over 2%.
4. March 6: Cryptocurrency Reserve Announcement
On March 6, Trump signed an executive order establishing a U.S. cryptocurrency reserve. However, the lack of clarity on how this reserve would function disappointed many crypto enthusiasts, triggering a five-day downturn in BTCUSD, culminating in Bitcoin briefly dipping below the crucial $80,000 level on March 10.
5. April 2: Escalation of Trade Policies
The trade war entered a new stage when Trump unveiled his long-promised ‘reciprocal’ tariffs strategy, imposing import duties on more than a hundred countries. The market reacted sharply, with the S&P 500 losing more than 11% in just two days, while DXY dropped to a fresh six-month low.
6. April 9-11: Abrupt Policy Reversals
The drama continued as Trump’s administration rolled back duties on trading partners less than 24 hours after they took effect, announcing a 90-day freeze on reciprocal tariffs. However, the trade conflict with China escalated sharply, with the U.S. increasing tariffs on Chinese imports to 125%. This brought the total U.S. tariff burden on Chinese imports to 145%. Financial market analyst Kar Yong Ang noted that traders were stunned by Trump’s sudden U-turn on trade policy, leading to a knee-jerk reaction of buying gold.
The Broader Economic Implications
Trump’s aggressive trade policies have fueled speculation about a potential global recession. The International Monetary Fund (IMF) downgraded its 2025 global growth forecast to 2.8%, warning of potential stock market crashes and a 7% contraction in the world economy should trade wars persist. Scott Bessent, the U.S. Treasury Secretary, hinted at de-escalating U.S.-China trade tensions, but it is clear that investors should brace for a period of heightened volatility and uncertainty.
Advice for Retail Traders
Kar Yong Ang advises retail traders to focus on short-term trades with tight stop-losses rather than long-term positions. He recommends cutting exposure to U.S. equities, diversifying into gold and other safe-haven currencies, and maintaining a clear mindset to quickly switch positions as market conditions evolve.
Conclusion
The full effect of Trump’s policies is yet to materialize, but the potential impact on global trade and the macroeconomy is substantial. As the world watches the unfolding drama, one thing is certain: the financial markets will continue to react to every twist and turn in Trump’s administration, making it a critical time for investors to stay informed and agile.
Compliance Reminder: Trading Contracts for Difference (CFDs) carries a high level of risk and may not be suitable for all investors. Emotional trading can increase this risk. Always trade within your means and understand the risks involved.
Octa is an international broker providing online trading services worldwide since 2011, offering commission-free access to financial markets and various services used by clients from 180 countries. The company is involved in charitable initiatives and has won multiple awards for its services.
English 