United States Dollar A boring but essential answer. The United States Dollar is the world’s reserve currency and will remain so for the foreseeable future. The mighty Greenback is the default means of payment for almost all international trade. The Dollar’s supremacy is incontestable even without a Trump presidency, but with DJT at the helm market participants can expect the Dollar to be wielded more aggressively than usual. One part of the equation is the difference in interest rates between the Dollar and other currencies. As of the time of writing, rates on the Dollar are 4.5%. In contrast, rates on the Euro are around 3%. The rate on the Japanese Yen has just been adjusted to 0.5%. Put simply, the ability to earn higher interest on the Dollar makes it more attractive. A large part of the Dollar’s ascendency over the past four months is due to interest rate differentials. This is worth bearing in mind when the US government starts calling for aggressive rate cuts. Slashing interest rates would weaken the Dollar, whereas maintaining them at the current high levels ensures demand remains strong. Tariffs are the second part of the equation. Higher tariffs and the threat thereof will have a significant impact on the Dollar over the coming years. There are many mechanisms at play here, but suffice to say that every time the administration appears to soften its tone on tariffs, the Dollar tends to lose out against competing currencies. The first week of Donald Trump’s presidency saw significant declines in the Dollar, in no small part because expected tariff announcements failed to materialise. More generally, the fact is that commodity markets are denominated in Dollars. Whether traders are looking at gold, oil or anything else, the Dollar is on the other side of the trade. Best to keep an eye on it. Crude oil More so than most other markets, the price of oil is heavily grounded in reality. The world consumes millions of barrels of oil every single day, which means that supply and demand dynamics dictate everything. Reduced production, disruptions in the supply chain, sanctions and tariffs will quickly and inevitably increase the price of crude oil. On the other hand, faltering demand will rapidly cause prices to fall. Because of this, oil markets are some of the more susceptible to geopolitical events. As we saw throughout last year, every development in the Middle East prompted an immediate response in the price of crude oil. News items relating to attacks on refineries in the Russia-Ukraine conflict had a similar impact. Talk of sanctions and tariffs against oil-producing nations will no doubt feature prominently in international relations over the next few years, but one of the more overlooked elements is the demand side of things. Unfortunately, industrial production is down across the globe, meaning demand for oil is also on the decline. European manufacturing in particular has been hit hard in recent times, ironically in part because of higher local energy prices due to embargoes against Russian oil and gas. The Chinese economy has also exhibited some fragility in recent years. Cracks are even starting to appear in the United States. Should worldwide demand continue to fall, crude prices may follow suit. Economic growth is practically synonymous with higher oil consumption. The interconnectedness and relevancy of oil markets ensure they will remain at the forefront of any political or economic shift. Not to be overlooked. Cryptocurrencies The incoming administration has been abundantly clear on its stance on cryptocurrencies. The response from the crypto markets has been equally unambiguous. Bitcoin is up 50% since the election. Exchanges have seen huge inflows. Ross Ulbricht is out of prison. Calls for deregulation are ringing out loud and clear. The Securities and Exchange Commission has been difficult to contend with in recent times, to put it mildly. But change is in the air. Former chair of the SEC Gary Gensler is long gone and his replacement, Paul Atkins, although still awaiting confirmation, could not be more diametrically opposed to the outgoing team. The last few years were some of the darkest in the history of crypto. Stifling and confusing regulations crippled the fledgling industry just when it needed guidance the most. Many voices in the scene repeatedly begged for greater clarity, only to receive nothing but punitive measures in response. On top of that, the period was marred by the worst scams, hacks and scandals we have ever seen. The losses from the collapse of FTX alone reached into the billions. Utterly unforgiveable. All signs are pointing to the bad times drawing to an end. Many developments that have been held back until now are waiting to be unleashed. Interesting times ahead. Artificial Intelligence During his first week in office, President Trump announced the Stargate Project. The project intends to invest $500 billion over the next four years in AI infrastructure in the United States. The announcement alone triggered a flurry of buying activity in the tech companies most likely to benefit from such an investment. Chip manufacturers are likely to remain under the scrutinous gaze of investors with deep pockets. Nvidia (NVDA) shares almost tripled in price in 2024 alone and the company now stands shoulder to shoulder with the largest tech giants in America. The rise was largely fuelled by anticipated advancements in the AI sector. An argument could be made that the hype surrounding Artificial Intelligence is somewhat unjustified, time will tell. Pledges of such magnitude cannot be ignored however. There is something of an international arms race developing when it comes to AI, particularly between the US and China. Shortly after the announcement of Project Stargate, Chinese startup DeepSeek surprised everyone by releasing an open-source version of its AI model that supposedly competes with the best of what Silicon Valley has to offer. Even more surprisingly, the model was trained at a fraction of the cost of its US counterparts. Much like with the cryptocurrency industry, there is a certain amount of scepticism among large swathes of the general population when it comes to AI. There is certainly nothing wrong with being sceptical, but as any savvy investor will know, it is always worth keeping tabs on where the money is going.