Article by ForexTime
The unexpected nature of sudden announcements from the Whitehouse never fails to surprise.
Investors across the globe have been taken by surprise following the sudden news that top economic advisor to President Trump, Gary Cohn, resigned overnight. The breaking development encouraged an acceleration in selling momentum for the Dollar, with the Dollar Index touching its lowest level in two weeks. The resignation appears to have played a role in weakening risk appetite towards the stock markets. High-yielding currencies, like the South African Rand, suffered against the USD during trading on Wednesday. Other emerging market currencies, like the Russian Ruble and Turkish Lira, have also declined against the Dollar.
Gary Cohn was previously viewed as a leading candidate to replace past Federal Reserve Chair Janet Yellen, therefore his resignation has not been something that investors are prepared to overlook. Cohn was also seen as an advocate for global trade, therefore there is speculation that President Trump’s trade war rhetoric, is being considered as a catalyst behind his sudden resignation.
I think that investors will be inclined to take the news of Cohn’s resignation as another reason to sell the Dollar. It shouldn’t have a long-lasting impact on the stock markets and risk appetite, unless Trump does step up the trade war narrative.
The broad weakness in the Dollar during trading so far on Wednesday has been behind the Euro trading at its highest level in nearly three weeks, while the Japanese Yen appears to be close to achieving a new milestone high, after reaching its strongest level against the USD since November 2016 late last week. The Swiss Franc also gained against the Dollar.
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Gold appears to be at risk for profit-taking after originally trending higher in the early hours of trading today. As long as Gold remains above the psychological $1300 level, I remain bullish on the precious metal over the medium and longer-term.
The British Pound is surprisingly one of the currencies that has been unable to capitalize on Dollar weakness. The Pound is currently trading lower against the Dollar. This could be linked to the GBPUSD facing what is seen as quite tough resistance around the 1.40 handle, although Sterling sensitivity to Brexit developments could also be encouraging pressure on the Pound.
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Article by ForexTime
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