Dollar tumbles as Trump's usd-negative remarks triggered unwinding of recent long usd positions

Market Review - 21/08/2018  01:42GMT  

Dollar tumbles as Trump's usd-negative remarks triggered unwinding of recent long usd positions

The greenback tumbled in New York afternoon after U.S. President Trump criticised Fed Chairman J. Powell for raising U.S. rates, investors reacted by unwinding recent long usd positions.   
  
Earlier, Bloomberg reported in New York morning U.S. President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.   
  
Dollar's decline accelerated in New York afternoon after Reuters interview with Trump. Reuters reported Trump said on Monday he was "not thrilled" with the Federal Reserve under Chairman Jerome Powell for raising interest rates and said the U.S. central bank should do more to help him to boost the economy.  
  
In the middle of international trade disputes, Trump in an interview with Reuters also accused China and Europe of manipulating their respective currencies.  
  
American presidents have rarely criticized the Fed in recent decades because its independence has been seen as important for economic stability. Trump has departed from this past practice.  
  
The president spooked investors in July when he criticized the U.S. central bank's over tightening monetary policy. On Monday he said the Fed should be more accommodating on interest rates.  
  
"I'm not thrilled with his raising of interest rates, no. I'm not thrilled," Trump said, referring to Powell. Trump nominated Powell last year to replace former Fed Chair Janet Yellen.  
  
U.S. stock prices dipped after Trump's comments to Reuters and the U.S. dollar edged down against a basket of currencies.  
  
Trump, who criticized the Fed when he was a candidate, said other countries benefited from their central banks' moves during tough trade talks, but the United States was not getting support from the Fed.  
  
Versus the Japanese yen, although dollar initially dipped to 110.41 at Asian open, price rebounded to 110.69 in European morning on selling in euro, however, the greenback erased intra-day gains and fell to 110.36 in New York morning on falling U.S. Treasury yields and usd's weakness. Price later tumbled to session lows of 110.02 near the close after Trump's comments.  
  
Although the single currency remained under pressure in Asia and fell to +session lows at 1.1395+ in Europe due partly to a delayed reaction to news of gunshot incident in U.S. embassy in Ankara, price erased intra-day losses and rose to session highs at 1.1464 in New York due to selling in usd after Trump's comments in New York morning, price later rallied to 1.1485 following Trump's usd-negative remarks in Reuters interview.  
  
Reuters reported several gunshots were fired from a vehicle at the U.S. embassy in the Turkish capital, Ankara, on Monday hitting a window in a security post but causing no casualties.   
  
Although the British pound initially recovered to 1.2754 at Asian open, price fell in tandem with euro to 1.2730 in European morning, however, cable erased intra-day losses and rallied to session highs at 1.2799 near New York close due to broad-based selling in dollar after Trump's comment on Fed policy.  
  
Data to be released on Tuesday :  
  
Swiss trade balance, exports, imports, UK PSNB, PSNCR, CBI ind. trends survey, New Zealand GDT price index, Canada wholesales, and U.S. Redbook sales.