USD: Furore surrounding Flynn causes Trump (and the dollar) another headache

It was all going so well for the dollar on Friday, as it was steadily strengthening against sterling. Then came reports that Flynn had pleaded guilty when charged with lying to the FBI and the dollar started weakening. The retrace against sterling could have been more substantial, but it is possible that many traders had already taken their profits before the weekend to see where the land lay on Monday.

Like the EU and UK, manufacturing PMI from the US showed strength and, despite slowing from the month before, the reading was encouraging. From 58.7 in October, it dipped to 58.2 in November.

Tomorrow we’ll have the balance of trade for October and the non-manufacturing PMI figures for November. Wednesday sees the release of the employment change for November, while Thursday will see the initial jobless claims up to 2 December 2017. The week ends with a big one – non farm payrolls for November. Finally, we will have the unemployment rate for November and Michigan consumer sentiment.

However, the situation with Flynn is not over yet. In many ways, it could even be the beginning of something. It is certainly a story that won’t be going away anytime soon and one wonders whether it will lead to Trump and, if it does, what this does to the markets.

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