Currencies: Dollar slides after Trump complains about Fed, calls Europe and China currency manipulators

Currencies: Dollar slides after Trump complains about Fed, calls Europe and China currency manipulators

The U.S. dollar slid against major rivals on Tuesday, with investors rattled by fresh criticism from U.S. President Donald Trump over the policies of the Federal Reserve.

Trump criticized Fed Chairman Jerome Powell at a fundraiser over the weekend, news reports said, then further complained about Fed rate increases in a Monday interview with Reuters, while also repeating past accusations the Europe and China are currency manipulators. Trump, who appointed Powell, has previously expressed dislike of the Fed’s tighter monetary policy and a strong dollar.

If repeated enough, such criticisms of the Fed by Trump could “exert a powerful influence over market expectations,” but may also produce “diminishing returns” for him, said Neil Wilson, chief market analyst at Markets.com, in a note to clients.

“I think on this one the market will come round again and the dollar bounce back, but nonetheless it does appear the market is worried that the president will exert influence on Fed policy,” Wilson said.

A popular gauge of the buck, the ICE U.S. Dollar Index DXY, -0.15% was down 0.3% at 95.575 in early Tuesday trading in New York. This marks the index’s fifth losing session in a row, and the first such stretch since December 2017. according to FactSet.

The comments came ahead of the Kansas City Fed’s annual central banker symposium in Jackson Hole, Wyo. later this week. Market participants are focusing on Powell’s speech at 10 a.m. Eastern on Friday.

Don’t miss: Here’s how Jackson Hole could impact the dollar, bonds and emerging markets

The euro EURUSD, +0.2177%  has fallen 4.8% against the dollar in the year so far. The shared currency started 2018 strong, but weakened in part as hopes for tighter policy from the European Central Bank were disappointed. The euro benefited from dollar weakness, last buying $1.1525 up from $1.1484 late Monday in New York, marking its highest level in about a week and a half.

Read: Greece exits bailout, but ‘public debt tragedy’ persists

Similarly, the greenback has strengthened some 5% against China’s yuan in 2018, which is still less than the buck’s performance against other emerging markets currencies, such as the Brazilian real USDBRL, -0.1939% Russian ruble USDRUB, +0.8063% and South African rand USDZAR, -0.5969%

One dollar last bought 6.8452 yuan in Beijing USDCNY, -0.1910% down 0.2%, and 6.8409 yuan offshore USDCNH, +0.1258% up 0.1%, where the currency trades a bit more freely.

Elsewhere, traders of Britain’s pound GBPUSD, +0.2110%  are closely watching a meeting between U.K. Brexit minister Dominic Raab and European Union chief negotiator Michel Barnier, who are set to meet to discuss the future relationship between London and Brussels. While risks have been rising the U.K. was facing a no-deal exit, Raab commented over Twitter Tuesday that he was “confident” a deal could be struck.

The pound was muted, buying $1.2838, up from $1.2795 late Monday.

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