The end of the week saw the USD drop significantly against the Japanese Yen as safe havens were sought following news that Flynn would testify that Donald trump directed Mr Flynn to make contact with the Kremlin. The news seeing the USD/JPY drop around 100bp in Friday’s trading, with the USD/CAD losses being even more dramatic and sustained.
Michael Flynnâ€™s admission
Trumpâ€™s ex-national security advisor Michael Flynn admitted on Friday that he had indeed collaborated with Russian ambassadors and that he had previously been untruthful with the FBI. The admission was made following an investigation which was led by Robert Mueller into Russian meddling in the 2016 US election. It is now understood that Flynn is collaborating with the investigation which could see the investigation go a lot further due to the very senior post he held in the administration, with Flynn remaining a close confidant and friend to the president after his expulsion.
Trump fights back
In typical Trump fashion, it wasnâ€™t long before tweets from the president were flowing. The vast majority being aimed at Flynn and ABC reporter the latter relating to erroneous reporting on the incident.
Brian Ross the ABC news anchor reported that Flynn had been directed to approach Russian ambassadors whilst Trump was still a presidential candidate, which was discovered to be wholly inaccurate. Ross has since clarified that his sourced clarified these meeting occurred when trump held the position of President elect, the topic of conversation was also disclosed as the fight against ISIS with Russia and the US are discussing a collaborative effort.
As well as the USD/JPY dropping US stock markets also fell with the Dow Jones shedding 350 points which inspired the president to fire off another tweet in ABCâ€™s direction.
ABC reacted by suspending Brian Ross, the Dow Jones has now recovered following clarification that meetings were held after the election had been won by Trump.
Trump impeachment odds slashed
Regardless of the timing, Trump has always refuted any allegations relating to meeting Russian ambassadors or members of the Kremlin. The latest news will do little for the presidentâ€™s credibility or approval rating. This weekend has also raised questions as to whether Michael Flynn may have met the president whilst wearing a wire.
With rumours circling the odds that President will get impeached have been slashed dramatically with Coral bookmakers showing a 40% chance that President Trump wonâ€™t conclude his term as president.
This being said, although Trump continues to see his approval rating decline his original support doesnâ€™t appear to be waning and his approval with registered voter still stands at around 40%.
USD/JPY falls sharply
The news that Michael Flynn had turned a key witness for Robert Muellerâ€™s investigation into Russian interference in the 2016 US election saw the USD/JPY drop significantly. The currency pair lost roughly 100 basis point in a few minutes. The tremors saw investor flee to the Japanese Yen which benefited from a tumble in the US Dollar, equities and bonds being sold off.
The sell-off saw USD/JPY fall from 112.79 to 111.55 before correcting following the clarification of the facts.
The US Dollar to Canadian Dollar was also affected, with the pair plummeting even further. The news saw the USD/CAD falling from 1.2881 to 1.2771. Unlike against the Yen, the US Dollar has been unable to correct its losses. This was predominantly due to OPEC decision to continue the cuts in oil production until the end of 2018. As a key commodity currency, the CAD benefitted with oil rising to a two year high of $59.