US politics catch a lot of headlines today and over the weekend which might caused some anxiety in analysts. But such nervousness is not really reflected in the markets, in particular the currency markets. Major pairs and crosses are staying in very tight range today. At the time of writing, the biggest mover, AUD/USD, is just up 28 pips.
Headlines mainly centered around four issues. Firstly, it’s reported on Friday that Trump is considering to fire Fed Chair Jerome “Jay” Powell after last week’s rate hike. Treasury Secretary Steven Mnuchin then tweeted and denied it. Mnuchin noted Trump said “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so”. Then WSJ reported on Sunday that advisers of Trump have discussed in recent days arranging a meeting between him and Powell.
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Secondly, it’s Mnuchin again. He said he made individual calls with CEOs with the six largest banks. And, “The CEOs confirmed that they have ample liquidity available for lending to consumer, business markets, and all other market operations.” “He also confirmed that they have not experienced any clearance or margin issues, and that the markets continue to function properly.” Mnuchin will convene a call with the President’s Working Group on financial markets on Monday too. Some criticized that Mnuchin’s move was counter-productive as it portrayed a sense of worry to investors.
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Thirdly, the partial federal government shutdown with start today with no immediate end in sight. Mick Mulvaney, the acting chief of staff of Trump, warned that “It’s very possible this shutdown will go beyond (December) the 28th and into the new Congress.”
Fourthly, Trump is going to replace Defense Secretary Jim Mattis two months earlier than expected after being annoyed by the latter’s resignation letter.
