US Dollar Plunged: Economic Agenda Blocked?

The US dollar has gone through the worst week in the past year. It has fallen by about 2% a week, the biggest decline since February 2016, and has recalled all gains since Trump's election as president, approaching the 97 pass.

Driven by the decline in the dollar, the euro and the Swiss Franc rose at the top, the euro rose by about 2.5% against the dollar, and the Swiss Franc rose nearly 3%, while the yen and gold also rose by about 2%.

The most painful experience of the US dollar comes from the "leak door" of President Trump. Investors have to worry about whether the Republican plan to support the economy can be realized.

President Trump told the Russian foreign minister last week that he had disclosed highly confidential information to Russia, which threatens to bring a source of information related to the Islamic state into a dangerous situation.

The white house immediately said the allegation was untrue, saying the emphasis was on counter-terrorism.

Mike, a US national security adviser, told reporters at the White House that the two sides discussed only the common threats faced by the two countries. Many leaders reviewed a series of common threats including civil aviation at that time.

Intelligence sources or methods have never been discussed.

The president has not disclosed any undisclosed military action, and no leakage has occurred.

Trump himself also said on twitter that he only discussed matters relating to terrorism, flight safety and human rights, not a leak.

When the leak door broke out, Trump was expelled from former FBI director Comi.

Comi was expelled from Trump by FBI in May 9th, when he was investigating Trump's "Russo Japanese gate" issue.

Subsequently, there were media reports that President Trump in the White House in February 13th, vice president Burns, attorney general Sessions and other high-level Security Council attended the meeting, the FBI (Federal Bureau of investigation) director Kimi left alone in the Oval Office, condemned many news leaked to the media, and said that Kimi should consider reporting confidential news reporters "locked up."

Trump also asked Kimi to stop investigating Flynn. He said, "I hope you can let go of this matter and let Flynn go. He is a good man."

Another media reported that during the 4-11 months of 2016, the Trump campaign team had at least 18 undisclosed contacts with Russian officials and some closely related personnel from Moscow Kremlin.

but

The statement could not prevent the market from starting to debate whether it would be impeached or not, and then came to worry about whether the economic reform could lead to a sharp decline in the US dollar.

Since last November 8th, the US dollar has been driven by the expectation of deregulation, tax reform and 1 trillion of the infrastructure spending plan.

Jan Hatzius, chief analyst of Goldman Sachs Group, said the policy outlook is expected to have changed dramatically in the past few weeks.

Jan Hatzius recently downgraded Trump.

It is expected that Trump's tax cut will be $1 trillion in the next 10 years, up from $1 trillion and 750 billion before, because the initiative for Trump's reform has now been reduced.

Kit Juckes, a foreign exchange analyst at Societe Generale, said that the judiciary decided on Wednesday to appoint a special legal adviser to investigate Russia, which made investors particularly uneasy.

Investors are worried that a series of problems in Trump's country may lead to a further reduction of its major strategic adoption.

Brown Harriman, a strategist at Marc Chandler, also said that investors were also worried that Trump's inexperienced team was in the mire of investigation and could not control the bill through Congress.

But impeachment of Trump is not an easy task. Both small and Nomura consider the possibility of impeachment very low.

Nomura said that in the process of escalating the situation, if the Congress Republicans choose to protect themselves and try to draw a line with Trump, they may have a greater market impact than "impeachment panic".

One more day in impeachment is to shorten the day on the legislative agenda, which will further delay tax reform, reduce the scale of defense expenditure growth and slow down the pace of regulatory easing.

After the plunge, investors are in the embrace of the euro in the light of recent European data, and the euro is expected to rise to the 1.12-1.13 level.

In addition to the euro, Xiao Mo suggested that investors should consider shorting the US dollar against the Swiss franc, and this week's Swiss franc's rally is also in line with the proposal of the company.

However, according to the biennial regression analysis of the past 20 years, the dollar is far from the extreme value.

When Clinton was about to face impeachment in 1992, the US dollar was underestimated by more than two times.

Therefore, although the US dollar is cheaper, it is not as weak as it can be. Therefore, if the political event is further fermented, the US dollar may continue to fall, and the US bond yields may also continue to call back when the fundamentals of data are not improving.

"Xiao Mo recommends shorting the US dollar against the European core currency. In the European currency, Xiao Mo is most inclined to short the US dollar against the Swiss franc.

This is mainly based on several reasons: the valuation bias of the US dollar, the higher exchange rate of the Swiss dollar and the reduction of intervention by the SNB.

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