Donald Trump’s greatest strength is his ability to weather controversy and even double down on his chosen course of action. Take the assassination of Iranian General Soleimani as an example. The criticism over the unilateral move was fierce, but the President was resolute in his course and then, in response to the Iranian push-back, doubled down by threatening to bomb Iranian cultural sites. Ironically, the storm has mostly blown over; the focus has now shifted to Iran’s downing of Ukrainian International Airlines Flight 752. While the criticism of Iran, in this case, is entirely justified, Trump’s role in the escalation leading up the incident has gone by the wayside. John Gotti, the infamous 20th-century gangster, once earned the moniker ‘the Teflon Don’ because of his ability to avoid prosecution after being acquitted in three high-profile trials. Donald Trump is almost certainly more deserving of the nickname, because no criticism, however damning, seems to undermine his position. If this latest incident proves anything, it's that each attempt to check his power only makes him stronger.
Bottom line: Last Wednesday, US ADP Non-farm Employment data markedly beat expectations, and the previous month's reading was also revised higher. The hope was that this would translate into a strong Change in Non-Farm Payroll stat on Friday, but unfortunately, that wasn’t the case. Instead, the crucial figure came out at 145k, which is just about enough to keep up with the pace of population growth. Average Hourly Earnings also underwhelmed, but it is worth bearing in mind that these are monthly readings which are prone to volatility and subsequent vision. Now that the Iranian crisis is seemingly behind us, the path is again clear for markets to make some positive forward progress. We’re just waiting for it to materialise before the next incident obstructs progress, once again.
This morning, Sterling dipped below the 1.30 mark against the Greenback for the first time in 2020 as more members of the Bank of England hinted at a potential interest rate cut in the coming months. Sterling’s trade-weighted Index has fallen below the 50-day moving average in what could be a sign of further weakness to come. UK GDP and manufacturing data disappointed this morning, contributing to further losses for the Pound.
In contrast to the Pound’s Index, the Euro trade-weighted Index has jumped above its 50-day moving average as improved global conditions have eased concerns for the outlook in the bloc. An improvement in sentiment will continue to benefit the common currency as investors pull out of the safe-haven Dollar.
The Euro is trading higher against the Greenback after pulling through the 1.11 mark late on Friday. Optimism has stemmed from the impending sign-off of the US-China phase one trade deal. Weaker jobs data also contributed to a broad pullback in the Dollar Index on Friday. The direction of the currency pair this week will hinge on a slew of data releases to come from both regions.