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Signal in the noise: Trump tweets and the currency market

Author

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  • Filippou, Ilias
  • Gozluklu, Arie E.
  • Nguyen, My T.
  • Viswanath-Natraj, Ganesh

Abstract

In this paper, we conduct a textual analysis of Trump tweets. Our method extracts the signal from the noise, by identifying the subset of tweets that contain information on macroeconomic policy or trade content. Informative tweets result in a USD appreciation and a decline in intraday volatility, reflecting Trump’s optimistic views on the U.S. economy. These effects are robust to controlling for macroeconomic announcements. We rationalize our findings within a model of Bayesian traders that interpret Trump tweets as a public signal in the FX market. Currency returns are driven by a bias between the public signal and speculators’ expectations.

Suggested Citation

  • Filippou, Ilias & Gozluklu, Arie E. & Nguyen, My T. & Viswanath-Natraj, Ganesh, 2025. "Signal in the noise: Trump tweets and the currency market," Journal of International Money and Finance, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:jimfin:v:156:y:2025:i:c:s0261560625000786
    DOI: 10.1016/j.jimonfin.2025.103343
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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