The Day So Far…

Once again Donald Trump dominates the headlines with the latest story in the NY Times sparking a flight-to-quality bid across assets overnight. The latest report suggests the US President asked FBI director James Comey to shut down the federal investigation into Trump’s former national security adviser Michael Flynn, which comes just one day after the Washington Post reported that Trump had divulged highly classified material to Russian diplomats. The result of these latest developments has been a growing chorus for the President to be impeached the obstruction of justice but unlike Nixon and Clinton before him, to remove Trump would require members of his own political party to turn on him, an event that would seem much less likely. Hypothetically, Trump could resign and hand over the reigns to what some see as the more suitable candidate Mike Pence, but I would say it is far too early to start jumping to conclusions and one trait that Trump has shown in spades since his taking over of office is his stubbornness and reluctance to conform to traditional protocol.

Looking elsewhere, the other notable event of the session thus far was the latest UK jobs and wage data which showed that real earnings had turned negative in the first quarter of the year. Although the unemployment rate fell to its lowest since 1975 at 4.6%, more people being employed but not getting paid more as the labour market tightens, is certainly not as positive as it may appear. This of course comes in the context of UK CPI data yesterday showed prices at the highest rate since September 2013, and with UK household finances remaining under the greatest amount of pressure since mid-2014. The net impact of this today has been minimal on Cable but it will likely further cement the view that the recent run up to 1.30000 in GBP/USD may well define the top of the recent range.

Negative UK real wages May 2017

The Day Ahead…

Not much on the schedule for this afternoon with the main feature being the latest DoE inventory report. The release comes after a surprising build of 882k in the headline API data which was against an expected draw down of 2.67mln, and as per usual investors will be closely monitoring the speed in which US output is increasing given that it is quickly closing in on the likes of Russia and Saudi Arabia. More people seem to be highlighting the difficulties of compliance if a long-term extension is agreed at the end of month, and for the time being these factors keep us more minded for the short. Finally, given the situation developing on Capitol Hill I would recommend strong vigilance for any commentary from the President or other high ranking officials within the Republican party.

 

Anthony Cheung
Anthony is a leading market commentator with over a decade of experience accumulated as Head of Market Analysis at a leading news and analysis organisation, and now a Director of Amplify Trading.