Late in the day we’re getting a headline from Trump who says “the dollar is doing great”.
He went on to say “I don’t think the dollar has declined too much” and that he’s not concerned about the decline and that it’s finding a fair level.
The market is taking that all as an endorsement of the recent US dollar selloff and it’s led to some massive stops in EUR/USD as it blasts through 1.2000 to 1.2068 in very short order.
Trump has long hinted that he’s in favor of a weak dollar, something he believes will help export competitiveness.
However the timing of his comments was unfortunate (or deliberate) as it comes at a time of broader questions about the US dollar and its sanctity at the center of the global financial system. Gold hit another all-time record today and Trump coupled his comments just now with a warning that Cuba will fall very soon.
That highlights the possibility of a war, which is also possible as he sails an armada towards Iran.
With all that, the market is reading the comments as an endorsement, if not cheerleading about a US dollar decline.
These moves are the kinds of things that will chase foreign capital out of US dollars. The US equity market had a decent year last year but in foreign currency terms it was less glowing. Today is another example of that with the S&P 500 up 0.4% but the US dollar down 1-2% across the board.
Now the question is where Trump wants the dollar. I think he might be overly focused on the yen, which paints a skewed picture, though it’s also carving out a massive triple top at 160.
This article was written by Adam Button at investinglive.com.