USD: Dollar down on the firing of Rex Tillerson in the biggest disturbance to Trump’s cabinet since the inauguration in January 2017

Trump announced in true Trump style the dismissal of Rex Tillerson, Secretary of State via Twitter. Disputes between the two have been ongoing, surrounding their policy on a number of geopolitical issues including North Korea, Russia and Iran. Initial reaction from the market led to a sharp fall in the dollar index (the measure of a currency against other majors) falling 0.28% and the euro benefitting by 0.52%.

Looking to the day ahead, we have retail sales out, which unexpectedly declined in January. Forecast suggests a more positive result for February, up by 0.3%. We also have PPI results out, a useful indicator of consumer inflation. Expectations in the market suggest inflation rates will edge higher. This has been a key influencer of market volatility recently but we don’t expect the result to change the upcoming interest rate decision – markets still forecast a rate rise at the next Fed meeting.

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