The Presidency of Donald Trump has differed from that of his predecessors in just about every manner imaginable. From the refusal to disclose his tax returns to the ensconcing of his own daughter as a de facto First Lady, Trump has crossed lines which would once have been regarded as sacrosanct time and time again. The idea that his behaviour may, ultimately, lead to impeachment has begun to migrate from being liberal wishful thinking to serious political consideration, thanks in large part to allegations of links to the Russian government which refuse to go away.
Any of the anti-Trump voices assuming that there’s no chance of a full term being served or even, given Trump’s complaints of how difficult the job of President is turning out be, of him actually wanting to see out his time in office, should bear one thing very much in mind. When the story of President Trump finally comes to be written it will be a story of many things – from the political power of social media to the failings of the Democrats – but above all else it will be the story of a man who repeatedly completely confounded expectations. It can therefore be presumed that Trump is going absolutely nowhere in the immediate future, and so currency fluctuations will continue to be triggered by the kind of events which, in the past, would probably have passed unnoticed.
An example of this phenomenon occurred earlier this month, when the dollar surged against the pound in a manner which many traders found so surprising it was initially put down to a malfunctioning computer program or so-called ‘fat finger trade’. Earlier in the day (Thursday 18th May), the pound had hit its highest level since September last year, at $1.3047, but the afternoon saw a sudden surge in the value of the dollar. After struggling to explain the dramatic shift, traders eventually speculated that it was probably caused by the release of a video recording of former FBI Director James Comey (infamously dismissed by Trump) appearing to state that he hadn’t been pressured to end the FBI probe into links between the Trump administration and Russia.
If this had been true then it would, at least temporarily, have lifted much of the threat of impeachment from Trump, but it soon emerged that Comey was referring specifically to senior officials at the Justice Department, rather than to Trump himself. Once this realisation had sunk in the surge corrected itself, with the dollar slipping back and sterling recovering somewhat.
This episode serves as something of a microcosm of the behaviour of the currency exchangemarkets during the Trump presidency. The day before, the US dollar index had hit its lowest point since November 2016, during fears that the tax reforms, infrastructure spending and deregulation promised by Trump – and the growth this package would promote – could be derailed by allegations that the President has interfered with an investigation into former national security advisor Michael Flynn.
That these fluctuations should be caused by factors well outside the fiscal and political matters which generally impact upon the markets – in particular the surge caused by a brief and misinterpreted clip of an interview with a former government employee – demonstrate how difficult it has become to predict currency movements during the Trump presidency. One factor which can perhaps be taken for granted is that Trump will be much harder to shift than his detractors would like and that continuing unpredictability is, if anything, all too predictable.