U.S. President’s veiled criticism on Fed’s monetary policy dampened traders’ enthusiasm ahead of US-China trade talks, sending the greenback lower. Dollar dips against its major traded rivals. The dollar’s index DXY fell about 0.4 % on Tuesday to its lowest in almost two weeks.
Specifically, in an interview with Reuters, Trump said he is “not thrilled with his (Powell’s) raising of interest rates”. He also asked Fed to give him “some help” to negotiate with the country’s trading partners. While he did not accuse the US Central Bank directly for tightening monetary policy, his comments were unusual for a US President. Taking into consideration Fed’s independency, markets reacted adversely to Trump’s statements seeing them as threat to such independency.
Trump accused China and the EU for manipulating their currencies. He also added that he doesn’t expect much from US-China trade talks this week.
Mid-level officials from the USA and China will meet this week in Washington to discuss the trade dispute. It remains unclear whether the gap between the trading rivals will be bridged, as little effort is made to de-escalate the conflict.
Forex Market – Dollar dips; what about other major currencies?
The Dollar slipped 0.4% against its major traded rivals following Trump’s comments on Fed’s decisions on interest hikes. Traders focus also on US-China trade talks later this week. The greenback remained unchanged against the Yen after dropping below the psychologically-significant 110 level for the first time since June 28.
The Australian Dollar edged up 0.3%, after Australia’s Prime Minister narrowly won a leadership ballot.
The Euro strengthened 0.4% against the greenback. The common currency fell 0.2% after sliding to a 13-month low last week.
The Swiss Franc edged higher 0.4% against the greenback, a 3-week peak.
The Sterling recovered to a 2-week high boosted by dollar’s dive. However, last week it was the sixth straight week of losses for the pound amid concerns for no-deal Brexit. The pound fall 0.1% against the single currency.
Gold prices increased for a second day, supported by dollar’s fall following Trump’s criticism on Fed. Last week gold suffered its largest weekly loss since May 2017, hitting a 19-month low.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.