I wrote yesterday about how journalists were attributing the Euro’s recent weakness to President Trump’s political problems.
I thought at the time this was a stretch too far, but now it seems the orange President is truly finding himself in a pickle. Yesterday’s issue was his auto-declassification of classified intelligence in a meeting with the Russians, but even the President’s detractors had to admit he had done nothing illegal. The issue today is something potentially much more serious than an allegation of poor judgement or a slight to an ally: what is being alleged now is that the President pressured the then-Director of the FBI whom he subsequently fired, James Comey, to drop an ongoing enquiry into possible inappropriate links between the Russian government and Michael Flynn, President Trump’s ex-National Security Advisor.
The search is now on for a “smoking gun”, i.e. some evidence that President Trump pressured Comey and in doing so arguably obstructed justice. If any such evidence is produced, and the Republican Chair of the appropriate Congressional committee has already requested relevant records from the FBI archives, then it could be the basis for the commencement of impeachment proceedings against the President. This is spooking the market, producing a weak U.S. Dollar and strengthening safe haven assets such as the Euro, the Japanese Yen, and Gold.
It is worth keeping things in perspective and pointing out that the U.S. Dollar was in some trouble anyway: at the weekend, it was only a whisker away from being below its levels from both 3 and 6 months ago, a classic definition of a long-term bearish trend. It was also rejecting from below a broken long-term bullish trend line which was beginning to act as resistance. Now the U.S. Dollar Index is just a few points above a crucial long-term support area at 12203.
