USD under the influence of an unhinged President - AmpGFX

One wonders if the USD may also be undermined by an increasingly erratic President and the approaching mid-term elections, suggests Greg Gibbs, Analyst at Amplifying Global FX Capital Pty Ltd. 

Key Quotes

“The President has twice in recent months openly criticized the Fed, lamenting rate hikes, and called China and the Eurozone currency manipulators.”

“Trump and the right-winged media have stepped up claims of an FBI/Justice Department conspiracy.  And today Trump is propelling conspiracy theories that big internet search engines are biased against him and other conservatives.”

“Trump is battling against a Mueller investigation that appears to be closing in, and threatening again to fire his Attorney General Sessions.  The Trump circus is in full swing, and the market may be wondering how this affects the mid-term elections.  A strong showing by Democrats might seem to unhinge the President.”

“In broad strokes, Trump appears adept at, even revels in, the chaos and media circus around him.  And we doubt that Democrats will successfully move an impeachment of Trump forward to a conviction in the Senate, even if it is revealed, as we suspect it will, that Trump’s campaign knew Russians had hacked the Clinton Campaign and DNC before it was WikiLeaked.  Being informed about it is still not clearly collusion.”

“As such, we see the political turmoil as more noise than signal for the USD.  In a long-term sense, the Trump legacy may be weaker international relations, heightened partisanship and a distracting internal culture war that will make it more difficult for US policymakers to dig itself out of a fiscal hole.  This could over the longer term weaken the USD.”