Forex News – Dollar gathers tailwinds as White House departures continue
Posted on August 21, 2017 at 3:14 pm GMTChristina Parthenidou, XM Investment Research Desk
Steve Bannon, known as the brain power behind Trump’s nationalistic ideology, has mutually agreed to exit the position of the Chief Strategist at the White House on Friday, extending the list of people departing from the Trump’s inner circle. With the board of directors being replaced frequently, as never happened before, uncertainty around Trump’s administration has been escalating, dragging the dollar into further losses.
Following numerous resignations last weekend, with the CEO of two business councils leaving their positions in protests against the president’s reaction to the Charlottesville violence, the chaos inside the White House continued with Steve Bannon leaving his role as the President’s Chief Strategist on Friday. That was three weeks after Antony Scaramucci was fired as a communications director and Reince Priebus resigned from his position of Chief of Staff.
Bannon was said to hold a strong influence on Trump’s nationalistic and populist views, supporting some of the recent controversial policies including the travel ban on people from several Muslim-majority countries, the US withdrawal from the Paris climate accord and the pullout of the Trans-Pacific Partnership trade agreement. Besides that, Bannon was recently working on hardline restrictions on a Chinese bilateral trade deal, incentivizing investigations into Chinese intellectual property practices. Although Bannon seemed to be on Trump’s side, his departure was mainly attributed to his far-right ideas which contradicted the democratic views of the other White House members, including the head of the National Economic Council, Gary Cohn, as well as to the hostile language he used against the Democrats following the violent incident in Virginia.
As the political turmoil in the US heightens, Trump appears to lose supporters from key states which helped him win the elections last November. According to an NBC/ Marist poll published on Sunday, Trump’s approval rating dropped below 40% in Michigan, Pennsylvania, and Wisconsin. However, his administration is currently trying to restore confidence by bringing tax reforms back to the table. If this turns successful, the President would put his first check mark on his economic agenda.
Turning to the reaction in the forex markets, the recent unexpected reshufflings in the White House and the Fed’s potential pause on rising interest rates weighed on the dollar on Monday, relative to the previous week’s closing. The dollar index, which gauges the dollar’s strength against a basket of currencies, fell by 0.27% to 93.05 in the late European trading hours. Dollar/yen sank by 0.40% to 108.70, while dollar/euro jumped by 0.43% to an intra-day high of 1.1809. Pound/dollar gained 0.22%, rising to 1.2908.
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