Following his acquittal by the Senate in his impeachment trial, Donald Trump is back to his old strong-arm political tactics. In perhaps the most ironic prayer breakfast ever, the US President took time to castigate both Democrats and Mitt Romney – the only Republican to cross the ail and vote for removal – calling their opposition efforts “bullshit”. It doesn’t end there; under the guise of a top brass shake-up, the administration looks like it will sack Security Council Member Lieutenant Colonel Vindman, who testified at the impeachment hearings.
This morning, in a “very difficult” call with UK PM Boris Johnson, Trump was “apoplectic” with anger over the UK’s refusal to exclude Huawei from UK 5G infrastructure. The fact that there isn’t a viable US alternative or that it is an internal UK political decision, were statements left unvoiced by the UK contingent. It’s unclear how this episode will impact the UK’s trade deal aspirations later this year, but the US President isn’t one to let a perceived slight go lightly.
Bottom line: The impeachment trial had taken a lot of Trump’s energy, relegating him to deal-making in order to bolster his image while the pressure was on. The acquittal will reaffirm the President’s combative approach to foreign policy. If you thought the China Phase One deal had capped risks to global growth, you were very much mistaken.
Yesterday, Cable extended losses and posted its first close below the 1.30 level this week. The move was mostly pushed by Dollar strength, as the trade-weighted Dollar index extended 2020 highs amid strong US economic data. Today’s Non-Farm Payroll figure could consolidate the pair’s trend below the 1.30 level. A close below the big figure today would mark the first consecutive closes below the level for the first time since December.
The currency-cross remains relatively unchanged as US Dollar strength has sent both the Euro and Sterling lower against the Greenback. Yesterday, the pair dipped below the 1.18 level but has since recovered on London open this morning. This morning’s French and German industrial data came in much weaker than expected, so a weaker Euro may support the pair above the 1.18 figure throughout the day.
Yesterday, the common currency fell to four-month lows as the US Dollar index climbed higher. This morning, German and French industrial production data came in significantly weaker than expected which is likely to weigh on the currency pair today. What’s more, US Non-Farm Payrolls is poised for a strong reading after the ADP employment change came in better than expected on Wednesday. A strong reading here could extend the Euro’s losses deeper into the low 1.09’s.