Image via Kremlin.ru/Wikimedia
Seemingly since he took his place in the White House, President Trump has constantly been dogged by claims that Russia swayed the election in his favour and that elements of collusion may exist. Investigations into the theory are ongoing, and with Trump having fired ex-FBI Director James Comey, who was leading one such investigation, there are further legal questions about whether this represented an obstruction of justice. These ongoing Trump-Russia saga and legal issues could have a big impact on the US economy.
Russia and the USA already have a somewhat distrustful relationship, especially after trade sanctions were placed upon Russia by the USA and Europe after it invaded Crimea. In reaction to this, Russia reduced its investment in US goods, with bilateral investment falling. US direct investment in Russia fell to $9 billion in 2015, compared to $20 billion in 2009.
Should the ongoing tensions and suspicions continue then it doesn’t look like these investments are likely to increase. However, should the saga be swept aside and relations warm, it could have good implications for oil, energy and other commodities especially, allowing growth and stability in these sectors.
The USA and Russia have many mutual business interests, in certain industries. For example, the US has an established presence in Russia with companies such as McDonald’s (MCD) and General Motors (GM), while Russian businesses including Gazprom have a big presence on and for the USA.
These business interests will be impacted by any cooling of relations, and as such major contributors to both economies could see a negative effect. Should the investigations find that Russia did influence the US election then both economies can expect their economies to experience a rough time.
Ongoing uncertainty surrounding the outcome of these investigations and, to a lesser extent, the future of President Trump, have introduced some element of unpredictability to the currency markets. In May when Trump dismissed James Comey, the US Dollar fell as traditional safe haven currencies the yen and Swiss franc both gained in value.
Further uncertainty and emerging political news and events surrounding both the suspected Russia collusion and legal saga if Trump is accused of obstructing justice, will also affect the dollar. For forex traders and currency investors, keeping track of developments is essential to help make informed trading decisions should there be a major break in either of these cases.
Stocks and Shares
As mentioned above, should relations warm and these allegations fade away, it could be good news for commodity investors. Private investment in the Russian oil industry could be resumed with an increased growth for metals and agricultural commodities between the two nations. The likes of stocks and shares in US and Russian companies which operate in both countries should improve too, rather than take a hit if new trade sanctions were to be introduced.
The ongoing Trump-Russia and the legal saga still have plenty of time and further developments to come. Keep an eye on them to see how the US economy is affected and prepared to safeguard or profit from any opportunities it presents.