The US Deputy Attorney General Rod Rosenstein appointed an independent prosecutor to dig into Trump’s ties with Moscow, former FBI director Robert Mueller. Democrats in opposition demanded an independent investigation into the reason for Comey dismissal and the intention of covering up former adviser Michael Flynn, who was defenestrated because of undisclosed communication with Russian ambassador in the US.
According to Trump, Mueller’s appointment will allow the administration not to get bogged down in the proceedings and return to the political agenda, namely to the tax reform and the fiscal plan. Dollar bulls which were on the verge of collapse could recover, staging a relief rally on Thursday. Trump’s reassuring rhetoric was able to stop the fall, but selloff will dominate the market. Now the mood of the markets will depend entirely on the new details on the investigation.
Gold and the Japanese yen resumed gains after a brief respite, as market participants are wondering what size the political crisis in the US can take, laying out a wide variety of outcomes. Given that the stock markets in the US were at record highs, the investigation in the White House could serve as a welcome signal for a selloff, reinforced by speculative pressure. If the main bullish forces capitulate this could cause a collapse in the market. However, based on today’s reaction, there was some relief, as the results of Mueller’s investigation are expected to put an end to numerous speculations around the fact that Trump’s victory has the hand of the Russian government.
Strong data on the labour market caused a short-term strengthening of the Australian Dollar, with shorts reigning over the sentiments later. In April, the Australian economy added 37.4K jobs, and unemployment fell to 5.7%, showed the report released on Thursday. The change in employment tops estimates for the second consecutive month, while inflation is close to the target level of 2%, bringing forward traders expectations about possible rate hike at the next meeting. As a commodity currency, Aussie depends on the situation in the commodity market where political uncertainty has dispersed most of the buyers. Therefore, the downward dynamics is likely to prevail over AUD pairs until the situation on the commodity market improves.
Retail sales in the UK have brought short-term relief to the concerns over consumption in the country, with a headline reading almost doubling forecasts, report shows. In annual terms, consumer spending on retail purchases jumped by 4.5% with a forecast of 2.6%. The theory was significantly divorced from practice due to the very warm weather in April, which boosted sales. Despite the fact that the Pound jumped above 1.30, taking the growth of expenses as a good signal for the economy, the purchasing power of the British will decline in the second half of the year, which will ultimately negatively affect consumption. It remains a mystery whether the Bank of England will take this data seriously or consider it only a short-term deviation from the trend.