10 days in purgatory
It seems stability in the White House administration is becoming increasingly hard to come by. Anthony Scaramucci, a former hedge fund executive, has lost his place as the Director of Communications for Donald Trump’s White House. The real motives and behind closed doors conversations about this manoeuvre will likely never be known.
The move is seen as a play for power by the new chief of staff to the President John Kelly, who clearly took umbrage with the amount of four-letter words in a tirade to a journalist at The New Yorker. But why are we even discussing the sacking of a character from Trump’s cabinet? Surely this can’t have moved the market? Well, it did – GBP/USD tipped above 1.32 as Scaramucci announced his departure, marking the highest rate seen mid-September of last year. Further unsettlement in the Oval Office seems almost certain, and as long as Trump’s mind is distracted by character politics, the less he’s likely to commit to his campaign pledges of USD-positive tax reform and infrastructure spending.
Australian central bank talks down the dollar
Despite leaving interest rates unchanged, the Reserve Bank of Australia highlighted the risks to the domestic economy through uncompetitive exchange rates – effectively signalling to traders that they believe the Aussie dollar is overvalued. After a brief dip lower in AUD/USD, rates have regained some poise, but in this current weak USD environment, it’s difficult to see many developed world currencies losing material ground against the greenback anytime soon.
UK as the sick man of Europe?
Figures due at 1000BST today are expected to show the Eurozone growing at a rate of 0.6% in Q2 – twice the pace of that here in the UK. While much of the euro area will be being dragged along by Germany and France, there’s been material improvement in the southern European states of Portugal and, particularly, Spain. Should this economic progress advance into the end of 2017, the ECB will come under further pressure to take their foot off the accelerator to stymie any inflationary threat on the horizon. The euro continues to trade strongly and will improve further should the central bank become more hawkish.