View Full Version : Trump's criticism of US Fed to blame for the dollar dip

07-23-2018, 10:07 PM
On Friday the 20th of July, in an unexpected turn of events, US President Donald Trump slammed the Fed. Most notably, he mentioned that raising interest rates and having a strong dollar put the US economy at a disadvantage compared with Europe, Japan, and other countries. He continued by expressing his dissatisfaction with the US Fed's plans to raise the key interest rate two more times this year. We believe that the US president is trying to influence the country's monetary policy and the dollar exchange rate by making such statements.

Formally, the US Fed operates independently of the government, so Trump's criticisms come off as somewhat strange. Then again, the international community is accustomed to the president's outlandish remarks, which often clash with the established norms. That same day, Trump announced plans to levy trade duties on goods from China worth 500bn USD. Based on the figures, these duties could affect almost all Chinese exports to the US. According to the IMF, escalating tensions with China could lead to a 0.5% slowdown in world GDP growth.

We believe that as far as the Fed is concerned, Trump will not go further than statements, otherwise this could undermine confidence in the US dollar as a whole. You can use forex returns calculator (https://alpari.com/en/trading/calculator/) and you will see that it is a good investment to buy American dollar at this moment in any currency in the forex market. It's important to note that Trump's oral intervention served its purpose: the US dollar was under pressure. On Friday, the EURUSD pair rose 1.2%, to 1.1174, while US Treasury yields declined. Alpari estimates that the market had a knee-jerk reaction to Trump's statements, and in the coming days the EURUSD pair will roll back down to 1.165.

09-06-2018, 04:28 PM
The dollar edged lower against a currency basket on Thursday as concerns over the U.S. - China trade war and recent turmoil in emerging markets weighed on market sentiment.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was at 95.04 by 09:46 AM ET (13:46 GMT).
The dollar was pressured lower by gains in the pound, which remained supported amid hopes for progress on Brexit following reports Wednesday that both the UK and German governments have abandoned key demands. See more in Forex - Dollar Dips as Trade Fears Weigh on Market Sentiment By Investing.com (https://www.investing.com/news/forex-news/forex--dollar-dips-as-trade-fears-weigh-on-market-sentiment-1600429)