Softer it slides
The clear theme of selling the US dollar remains centre stage at the start of the week. Clouded by shuffles within the White House and concerns over North Korea tensions, the US dollar took another downturn with the US dollar index sliding past 93.00 to print a fresh 15-month low. The removal of White House communications director 10 days after his appointment by the White House chief of staff on the latter’s first day certainly appears to be an unusual occurrence.
While the market may take some consolation from the fact that the newly appointed chief of staff has President Donald Trump’s full support, the disarray brings concern over tensions with North Korea. Increasingly, the issue of reaching a conclusion floats to the forefront as North Korea introduces more advanced arm powers. President Donald Trump’s Monday tweet stating that the US will ‘handle’ North Korea, may offer little consolation as the market continues to buy the safe haven JPY under multiple motivations.
For markets, the shift of focus back to economic fundamentals with the labour market updates at the end of the week may be the reprieve for the oversold USD. Watch for extended dips below the 92.56 support for the US dollar index.