US President Donald Trump, perhaps more so than any of his predecessors, is famously forthright. There are many adjectives we can use to describe the 45thPresident of the United States, but the one that seems to fit the best is truculent; Trump likes to pick a fight. There's no judgment attached to that assertion, it's simply a statement of fact.
Of course, Trump's spats have been covered by the media incessantly, long before he was inaugurated. However, one thing that tends to get overlooked is the President's issues with the strength of the Dollar, or, more aptly, his issues with the strength of the US dollar when compared to other currencies, specifically the Euro and the Chinese Yuan.
Serendipitously, at the time of writing this piece, the President obliged with a new tweet linked to the subject, calling on the Federal Reserve to cut interest rates (a cut is expected imminently) and alluding to currency manipulation from China and Europe.
The Dollar has been strong ever since Trump assumed the presidency back in January 2017, and, much to Trump's displeasure, the Fed has raised rates seven times in that time. Trump has taken the unprecedented step of criticizing Fed Chief, Jerome Powell, a number of times, even though the institution is supposed to be independent of politics.
Forex traders braced for important autumn
By the time you read this, that first-rate cute - expected to be 0.25% - might have been announced by the Fed, but it may not be enough to move the Dollar significantly, and that is where things might start to get a bit chaotic. Forex brokers, and you can see the full list of top online operators by following the link, are already gearing up for busy autumn due to the Brexit negotiations, and a potential run on the Pound, but Trump's reckoning with the Fed might add some extra fuel to the fire.
Why? Because there is a pressing need for Trump to start dealing with some issues in the economy. Yes, America has been booming since he took office - long before he took office - but some problems are beginning to be too big to ignore. In February, the US national debt hit a record of $22 trillion, and it's still growing. One way to get that down is through a weaker Dollar, which encourages inflation and takes some of the pressure off.
But there is also the scenario that Trump takes some executive action to weaken the Dollar in the face of a potential debt crisis. For instance, the Treasury Dept. could simply sell Dollars, although this won't go down well with other countries, and you could see some reciprocation.
There is a feeling that Trump is heading for a bit of a reckoning with the Fed, and this might lead to a perfect storm over the coming months. GBP is already under immense pressure, but the Euro might also take a bit of a bashing if there is, as looks increasingly probable, a no-deal Brexit. Would Trump simply sit back and accept a weak Euro, when he has already accused the EU of being currency manipulators? Unlikely. This has all the hallmarks of a story that is just getting started. And, with Trump involved, it's not quite clear how it will all pan out.