Monex: Impeachment Trump raakt dollar niet
Hieronder volgt een commentaar in het Engels van Ranko Berich, Head of Research bij Monex Europe op de koersbewegingen van de euro, het Britse pond en de Amerikaanse dollar.
The Feds rate projections at the last meeting are mimicked by fixed income markets at present, with the greenback starting on the offensive for a second day in a row. Back in December 2018 there was a divergence in the Federal Reserve’s outlook on rates and that implied by fixed income markets. Ultimately the latter proved correct as the US central bank embarked on multiple “mid-cycle adjustments”. For now, with the threat of another blow-up in US-China tensions seemingly off the table, markets are believing the narrative that the Fed will return to a wait-and-see approach.
President Trump is set to become the third US President ever to become impeached today as the House of Representatives is set to vote on proceedings this evening. The House will vote on two articles of impeachment tonight. The first alleges that Trump abused his power in office by pressuring Ukraine to launch investigations into a leading 2020 Democratic candidate, while the second alleges the president obstructed the congressional investigation by blocking witnesses from testifying and withholding documents. If passed, the matter moves onto the Senate for a trial, expected in January. The two presidents previously impeached by the house - Andrew Johnson and Bill Clinton - were acquitted in the Senate. The dollar is unlikely to be affected by the process given that the Republican party holds a two-thirds majority in the Senate, but it would add an extra layer of drama to the 2020 Federal Election and arguably make it a more open race.
“Buy the rumour, sell the fact” is an old trader’s aphorism, but the words rang true for sterling yesterday as the pound fell back to levels last seen before the results of last week’s general election were known. At first glance, the cause of yesterday’s sell-off was the news that Boris Johnson would enact legislation ruling out an extension to the UK’s transition period and mandating a departure from the EU at the end of 2020. But a wider observation to be drawn from the price action is that market reaction to elections in large developed economies are often overdone - of the 8 general elections since 1992, all but one have seen GBPUSD reverse its initial one-day reaction within 3 months. The price action also indicated that Brexit news is likely to retain a measure of influence on the pound, with the trajectory of trade talks now in focus, as well as the residual risk of a no-deal end to the transition agreement in 2020. Labour market data was released yesterday and was actually better than expected, with net employment rising despite expectations for a fall.
Aside from a brief patch of strength late in the evening yesterday the euro has continued to trade broadly flat against the US dollar but has regained some of its recent losses against sterling.