If keeping a track on the Federal Reserve policy makers was not enough, traders are slowly getting accustomed to keeping a close watch on the US politics and developments from the White House.
Last week, traders were caught off-guard after the US dollar posted one of the strongest declines on the back of a rather quiet trading week from the US, which put the focus on Washington.
Traders had already gotten used to erratic dollar movements in the early part of the Trump administration, considering that president Trump was trigger-happy when it came to expressing his personal views on Twitter; whether it had to do with Trump’s opinion on the US dollar or trade issues or for that matter, calling out Germany as a currency manipulator.
Politics from the White House dominates market sentiment
The US dollar posted one of the strongest declines as the world’s reserve currency was testing the levels last seen in November 2016. In just four consecutive days, the US dollar index futures fell from 99.50 to a six-month low at 97.41 last week, losing about 2.3% since 12th May.
The strong decline in the US dollar index, however, had a rather mixed response with other currencies. The euro rose to a 6-month high while price action was muted in the British pound. The USD/JPY slipped to a 15-day low at 110.785 last week, while gold prices touched $1259 as a result of the weakness in the US dollar.
The reason for the sell-off in the greenback came about unsurprisingly on the political developments from Washington, amid a lack of any clear cues from the economic indicators.
Sentiment in the market started to dip after reports emerged that President Trump had fired the FBI director James Comey was investigating into the former national security adviser, Michael Flynn and his ties to Russia.
The political developments and the controversies aren’t something new to the Trump administration. Sentiment also soared partly due to the fact that since President Trump took office, the US administration was plagued by controversies than actual policy implementation.
