Politics never really goes away. The Washington Post reports that the special counsel Robert Mueller is investigating if President Donald Trump obstructed justice. This is a severe allegation that brought Nixon down.
When the former FBI Director James Comey was in charge, the investigation did not directly include the President. But things have changed since then.
Trump fired Comey on May 9th because of the Russia investigation. This consequently led to the nomination of Mueller to investigate any Russian interference. And Mueller is certainly investigating. The alleged obstruction of justice is not limited to Trump’s conversation with Comey about “letting Flynn go” but also his reported requests that other spy agencies intervene.
According to the report in the WP, the special counsel asked to interview three top spooks: Daniel Coats, Mike Rogers, and Richard Ledgett. This will probably happen soon.
Trump trouble and market implications
After Trump was elected, markets were rallying on the hope that he would fulfill his campaign promises: tax cuts and infrastructure spending. These, in turn, would spark stronger growth, higher inflation, a faster pace of interest rate rises and an almighty US dollar.
Since Trump entered office nearly five months ago, this agenda isn’t being enacted and the dollar rally has been mostly reversed. However, if hope for this pro-growth agenda is totally derailed, it could further hurt the greenback.
The best currency pair for this is USD/JPY: it best reacts to US events and in addition, the yen is a safe haven currency, receiving inflows in times of trouble.
We have seen the strong reactions yesterday when the pair slipped under 109 on the drop in US inflation but jumped back up when the Fed expressed optimism.
If Trump remains in trouble, the Administration will not push the agenda and his political capital will have diminished. Nevertheless, the affair has seen many twists and turns and this is not the end of the story.
More: Trading a Trump impeachment with the US dollar in 3 phases
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