According to Greg Gibbs, Analyst at Amplifying Global FX, part of the market impact of the various trade policy actions by the USA may depend on the degree of political stability of the Trump administration.
Key Quotes
“When Trump’s approval rating was at its weakest, the trade rhetoric appeared to have a more negative impact on the USD, tending towards notions of US isolation and views that Trump’s opponents might use global and industry backlash to undermine Trump’s hold on power.”
“However, over recent months, Trump has been more effective in throwing a smokescreen over the Mueller investigation, and may be gaining traction with widening frustration over the investigation that has dragged on for over a year. He also senses that he is shoring up his voter base and broadening his appeal to the left by pursuing a tougher trade policy. As such he appears to be in a stronger political position and market reaction to trade-protectionist rhetoric is working more in favour of the USD.”
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