NEW YORK May 4 Comments made by U.S. President
Donald Trump on Twitter may drive movements in U.S. stocks, but
they have generally minimal impact in the foreign exchange
market, Deutsche Bank said in its latest research note.
The bank's macro strategist, Oliver Harvey, said however
that the few sharp moves that can result from Trump's tweets are
worth following as they tend to extend for several hours.
"The bottom line is that while Trump tweets should continue
to be highly relevant for the FX market, there seems little
prospect of building a systematic strategy around them, except
for the observation that sizable moves seem worth following,"
The average hourly change in dollar/yen, the currency pair
most sensitive to changes in U.S. fiscal, geopolitical, or trade
policy, is just 10 pips, which is modest by currency standards.
A pip is the smallest amount by which a currency pair can
A currency pair can move 10 pips on a regular trading day
without news driving it.
The Deutsche analysts said of Trump's 70 relevant tweets on
the economy, foreign affairs and trade since the November
election only seven have seen a greater than 25-pip move in
dollar/yen, and some of these larger moves can also be
attributed to other factors.
Harvey said it pays to follow through on those 25-pip moves
as they tend to continue over a four-hour period. None of those
moves have been reversed over a 12-hour period, he added.
Trump's tweets over the last two months, Deutsche also
noted, have narrowed to focus more on domestic issues such as
jobs and healthcare.
Trump is a prolific user of Twitter, posting about five
tweets a day on average since his inauguration on Jan. 20.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Frances