The Trump trade has been as wild a ride as a Sean Spicer press conference since its inception in November of last year as it became clear that the Republican candidate would win the White House. The ratcheting up of expectations through the transition from the Obama to Trump presidency has given way to an administration dogged by scandal, rumor, an inability to articulate and enact policy, and more leaks than the Italian navy.

Impeachment is a phrase that has been thrown about liberally (pun fully intended) in the past few weeks and more and more political commentators believe that Congress will pull the trigger given these latest revelations. We have to remember that President Clinton was served articles of impeachment for lying about his affair with Monica Lewinsky. Democrats think a Rubicon has been crossed, but when will moderate Republicans?

The dollar is not pricing in an impeachment nor a change at the top of the U.S. government at the moment. What it is pricing in however is delays to governing.

Every minute that legislative and executive branches of the U.S. government are focused on cops and robbers and he-says-she-says is a minute wherein the tax bill, border wall, tariff negotiations, Homeland Investment Act or change to Medicare is not being debated, scored and advanced. Investors bought the dollar because Trump’s policies were going to be good for the dollar; without those policies his Presidency is little more than a soap opera on the world’s most important stage.

The dollar can definitely recover with Trump at the helm, although the recent revelations will make the legislative roadmap a lot more difficult for him, and currencies being a relative value play, the dollar may have to rely on weakness elsewhere in order to gain some strength.

We have to think that an impeachment in the short term would not help matters however as these investigations and eventual subpoenas and further legal apparatus would take months, and one has to think that Donald Trump is not likely to come quietly. In this instance, the dollar would likely be dumped in favor of the JPY, the EUR and even GBP.

Impeachment is a long way off and dollar strength from it even further.

 

Jeremy Cook is the Chief Economist at World First and one of the UK’s leading voices on foreign exchange.

World First is a global leader in the international payments market. Specialists in foreign currencies and money transfer, World First helps businesses, online retailers, and individuals move their money quickly, securely, and with full transparency. Sign up now to start saving time and money on your international payments. Visit the World First blog for daily updates and insights.

 

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