Strange-But-True: Studies Show the Dollar Reacts in a Predictable Fashion When Presidents Are Sworn in

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History shows the US Dollar virtually always moves in the same direction after the inauguration of the new president on January 20.

Donald Trump is the next president to be sworn in, and so far the Dollar has risen strongly since his election due to his manifesto of a pro-growth fiscal policy, overseas capital repatriation policies and trade protectionism – but will the rally continue?

Nordea’s Head of FX Strategy Martin Enlund has crunched the numbers and come up with some remarkable results.

The Effect of Presidential Inaugurations on EUR/USD

Enlund starts by looking at the EUR/USD pair and analysing its performance after inauguration day from 1973 onwards.

The chart below shows the results.

The first thing to note is the remarkable clustering of results in the positive half of the chart compared to the negative part.

“On all presidential inaugurations since 1973, both first and second terms, EUR/USD has risen by an average of 3.6% between the yearly open and by the end of February,” says Enlund.

The dark green line shows it has only dropped once, but that was in 1973 when the Bretton Woods agreement broke the Gold Standard.

“It has only dropped once out of 12 times (in 1973, and that was in conjunction with the then-ongoing collapse of the Bretton-Woods system.,” says the Nordea strategist.

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