The US Dollar fell even as stocks turned sharply lower on Tuesday, on news that President Trump had fired his Secretary of State, Rex Tillerson. By noon in New York, the Dollar’s index against a basket of major currencies had fallen almost half a point to a 6-day low of 89.20 and the DJIA had tumbled 250 points from earlier levels. Overnight in Asia and this morning in Europe, the USD has steadied somewhat, but failed to make much progress to the upside and investors will be nervously eyeing a level of technical support around 89.05 which, if broken, could signal further losses.
It wasn’t just the fact of Mr Tillerson’s departure, but the way it had been announced with the Secretary of State learning of his fate from the POTUS Twitter feed. President Trump subsequently told reporters that he and Tillerson disagreed on Iran, that he made the North Korea decision himself and thinks Tillerson will be "much happier now." Trump said "I wish Rex Tillerson well… I very much appreciate his commitment and his service and I wish him well. He’s a good man… We got along actually quite well but we disagreed on things.” The Trump White House has seen 24 departures in its first 417 days - a rate of around one senior position every 17 days (and more first-year departures than any other president in at least 40 years). A chief of staff, press secretary, three communications directors, a chief strategist, a health secretary, and now a Secretary of State and Personal Assistant are among those who have left the Trump administration.
Amidst the political drama, the economic numbers seem like something of an after-thought. The Labor Department said its Consumer Price Index rose 0.2% last month after jumping 0.5% in January, taking the annual rate to 2.2%, up from 2.1% as the weak reading from last year dropped from the calculation. Excluding the volatile food and energy components, the CPI rose 0.2% after increasing 0.3% last month to leave the annual rate unchanged at 1.8%. After the inflation numbers, today we have retail sales and PPI and then towards the end of the week it’s housing and industrial production data. The USD index opens this morning in North America around 89.35.