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BANGKOK 18 November 2018 07:05
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Dollar falls after Trump criticizes Fed

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Dollar falls after Trump criticizes Fed

By Tom Finn

 

2018-08-21T011132Z_1_LYNXNPEE7K01M_RTROPTP_4_GLOBAL-FOREX.JPG

FILE PHOTO: U.S. Dollar banknotes are seen in this photo illustration taken February 12, 2018. REUTERS/Jose Luis Gonzalez/Illustration/File Photo

 

LONDON (Reuters) - The dollar weakened on Tuesday after U.S. President Donald Trump criticized the head of the Federal Reserve for raising interest rates.

 

Trump said on Monday he was "not thrilled" with Jerome Powell's rate hikes and said the U.S. central bank should do more to help him to boost the economy.

 

American presidents rarely criticise the Fed, whose independence is considered important for economic stability. But Trump has made reducing U.S. trade deficits a priority, and the combination of rising interest rates and a strengthening dollar poses risks for export growth.

 

"It would appear that Mr Trump would like to keep the U.S. dollar a little on the weak side in order to remain competitive," said CMC Markets chief markets analyst David Madden.

 

"But given the dollar has been in demand recently on account of geopolitical issues and the Fed's monetary tightening policy, he might find it difficult to talk the greenback lower."

 

The dollar index <.DXY> against a basket of six other currencies fell 0.3 percent to 95.596 as of 0730 GMT after touching 95.440, its lowest since Aug. 9.

 

Escalating trade tensions between the United States and its trading partners and a plunge in the Turkish lira have pushed the dollar index up recently.

 

But the greenback weakened on Tuesday as investors ditched it as a safe haven before China and the United States hold talks this week that may help ease their dispute over trade.

 

Trade tensions have on the whole helped the dollar, which benefits from geopolitical turmoil as the market seeks out less risky investments.

 

"It looks as though Trump's comments have caught the market very long dollar after last week's emerging market rout," said Chris Turner, head of currency strategy at ING in London.

 

YEN BACK?

The dollar's advance - it has gained 8 percent since January - would not be reversed, however, unless the Fed decided "that there has been an unwarranted tightening of financial conditions and want to slow the pace of rate hikes," Turner said.

 

The Fed has raised interest rates twice this year and is expected to do so again next month.

 

Traders are preparing for the release of Federal Reserve policy meeting minutes on Wednesday and an annual Jackson Hole symposium for insights into the direction of U.S. monetary policy.

 

Against the U.S. currency, the euro <EUR=> strengthened 0.3 percent to a daily high of $1.154.

 

Concerns that a currency crisis in Turkey would hurt euro zone banks and uncertainty about the Italian government's planned budget have weighed on the euro recently.

 

Trump's remarks appeared to bolster appetite among investors for the Japanese yen as a safe haven of choice.

 

The yen <JPY=> was basically flat at 110.08 yen, paring gains after touching as high as 109.775 yen earlier.

 

The dollar on Tuesday fell below the psychologically-significant 110-yen level for the first time since June 28.

 

The Australian dollar <AUD=> was 0.13 percent higher at $0.7350, after Prime Minster Malcolm Turnbull survived a leadership vote by a narrow margin.

 

(Additional reporting by Daniel Leussink in Tokyo, editing by Larry King)

 
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-- © Copyright Reuters 2018-08-21

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Posted (edited)
44 minutes ago, webfact said:

But the greenback weakened on Tuesday as investors ditched it as a safe haven before China and the United States hold talks this week that may help ease their dispute over trade.

Dateline: December 5, 1941. The stock market rallied today and the dollar weakened on optimism that Japanese envoys in Washington DC would reach mutual agreement with American negotiators on tensions in the Pacific and Far East.

Edited by zydeco
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I was wondering why the US$ nosedived against the THB today.  Perhaps this was it....idiot Trump and his big mouth.

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3 minutes ago, Berkshire said:

I was wondering why the US$ nosedived against the THB today.  Perhaps this was it....idiot Trump and his big mouth.

Or it could be that the Bank of Thailand has indicated it will raise interest rates. Darn that Trump. Now, he secretly messing with the Bank of Thailand just to make Fred and Berkshire angry.

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19 minutes ago, zydeco said:

Dateline: December 5, 1941. The stock market rallied today and the dollar weakened on optimism that Japanese envoys in Washington DC would reach mutual agreement with American negotiators on tensions in the Pacific and Far East.

You may be on to something here.

  We just never know what military minds are doing  that we do not know about.

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33 minutes ago, zydeco said:

Or it could be that the Bank of Thailand has indicated it will raise interest rates. Darn that Trump. Now, he secretly messing with the Bank of Thailand just to make Fred and Berkshire angry.

I haven't seen the BOT announcement of a hike in interest rates.  Or are you like your hero, just making stuff up? 

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Posted (edited)

It's glaringly obvious that US interest rates have fallen relentlessly since 1981.

The 10-Year U.S. Treasury Yield is about 2.85% today vs around 16% in 1981.

The FED may raise rates a bit more but that's only because they know they will need some room to cut them later.

The big picture hasn't changed although I'm sure they would like you to think that it has.

10-Year U.S. Treasury Yield (1981 – Present)

figure-one_long-term-interest-rate-trend

Edited by Topdoc
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Posted (edited)

Real presidents aren't supposed to comment on fed policy.

Even Federal reserve chairmen customarily only give cryptic hints that are analyzed like tea leaves.

"trump" as usual a dangerous and bizarre clown that doesn't know how to do the job and isn't willing or able to learn. 

Edited by Jingthing
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4 hours ago, KhunFred said:

Such brilliance. Trump completely disregards previous presidential protocol and custom. He won't be satisfied until he engineers a major recession.

The sick man of of the Potomac is "learning" from the sick man of the Bosporus :cheesy: .

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4 hours ago, Berkshire said:

I was wondering why the US$ nosedived against the THB today.  Perhaps this was it....idiot Trump and his big mouth.

Why is Trump the idiot?

If the reserve bank didn't raise interest rates, US citizens wouldn't have to pay more interest.

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I wonder if he is intentionally causing fluctuations in the markets after secretly buying and selling stocks, shares and currencies knowing what he say's will affect the markets.
More like yet another diversion from Mueller closing in.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

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36 minutes ago, stud858 said:

Why is Trump the idiot?

It probably has to do with his upbringing.

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