Trump Says Dollar to Strengthen, Mnuchin ‘Taken Out of Context’

Comments from U.S. President Donald Trump helped turn the dollar around and encouraged investors to sell gold with hawkish comments, saying he wanted a “strong dollar”, contradicting earlier comments made by Treasury Secretary Steven Mnuchin.

Mnuchin’s comments provided fresh trigger for dollar selling and raised questions if a weaker United States currency could provide a long-term impetus for the economy.

Trump added that he thought Mnuchin’s comments had been taken out of context, helping the US dollar tick upward to 89.3 against a basket of currencies.

“We want currency levels to reflect economic fundamentals”, said French Finance Minister Bruno Le Maire.

Then, later in the day, Trump had an interview with CNBC where he appeared to walk back Steve Mnuchin’s support of a weaker dollar.

“$1.25 in euro-dollar is a critical level and it’s got a lot of sticker shock associated with it”, said Greg Anderson, global head of FX strategy at BMO Capital Markets.

Naturally, the peso’s relative strength will remain subject to further ebbs and flows in the dollar and the price of crude in the days to come.

The U.S. dollar continued its decline during Thursday’s Asian trading session, falling against its primary trading partners and sending the dollar index down 0.38 percent to 88.90.DXY.

Asian shares fell on Thursday as the market digested currency remarks from the US Treasury Secretary Steve Mnuchin overnight and anxious about a potential global tarde war.

The found of Bridgewater, the world’s largest hedge fund, went on to list a series of effects caused by a weaker dollar and his opinion of those possible changes.

“Yeah, as I said, we also believe in a free-floating currency”, White House Press Secretary Sarah Sanders told reporters when asked about the drop-in value of dollar yesterday.

“That agreement [about not targeting the exchange rate], as subtle as you want, has been in place for decades now”, Mr Draghi said.

In keeping with the rising theme of expecting more dollar weakness, UBS Wealth Management upgraded its six-month forecasts for the euro and sterling on Friday to $1.28 and $1.45 respectively.

Now this looks like Trump’s comments have turned it around. In Frankfurt, European Central Bank President Mario Draghi suggested that recent foreign exchange moves weren’t driven by the economy but are a outcome of public statements.

He thinks the financial markets are pricing in more interest rate hikes from the Bank of Canad this year than what actually might take place. It fell 1.1 percent against the yen, to 109.13 yen.

Johnson named mining company Freeport-McMoRan as his pick for the metals stock for reaping the rewards of a lower USA dollar.