US: Politics more drama than risk - AmpGFX
The USA is not without political drama with the conviction of former Trump campaign manager Manafort and a guilty plea by Trump lawyer Cohen that has implicated the President in campaign finance violations, according to Greg Gibbs, Analyst at Amplifying Global FX Capital Pty Ltd.
Key Quotes
“These developments highlight the pressure that Trump is likely to face going forward by the wide-ranging Mueller probe including into what Trump knew about the Russian hacking of Clinton and DNC organisations.”
“The approaching November mid-term elections will be closely watched as a referendum on the Trump Presidency. There is a risk that the elections dampen enthusiasm for the USD, generating uncertainty over the capacity of the Administration and Congress to provide leadership.”
“However, to date, the US political and legal drama has had limited impact on US asset markets or the USD. Trump seems quite capable and willing to face-down all kinds of accusations that might once have been considered outrageous behaviour.”
“This may reflect the fact that Trump has proven over the two years of his presidency that he can operate through chaos and is not an easy target to knock-off.”
“His government has delivered on massive tax cuts, generating strong economic growth and record low unemployment. His populist policies may be polarising, but by and large, he has cut through with his tough stance on trade policy.”
“Even if Democrats take control of the House of Representatives and bring on impeachment proceedings, Trump is unlikely to be much fazed.”
“Trump appears to be exactly the type that would dismiss, even draw strength, from the high drama of impeachment proceedings.”
“In the meantime, Trump could continue to pursue his agenda on trade and foreign policy with limited interference from Congress.”
“Our assessment is that political drama in the US is unlikely to have a significant and lasting impact on US assets or the USD, although it cannot be entirely dismissed as a negative risk.”