Forex today: dollar bleed turns into hemorrhaging, loses the 96 handle on Trump's criticism of the Fed

Forex today was seeing more weakness in the greenback, stemming from Donald Trump's disapproval of the Fed's interest rate policy which is having an effect on the dollar and potentially undoing all of the 'good' work by the Trump administration for the US economy. 

Traders, just as they did a month earlier, almost to the day, sold the greenback in response to Trump's alleged comments that were supposedly made on Friday behind closed doors in a private meeting between the 1% club.

"U.S. President Donald Trump said on Monday he was “not thrilled” with Federal Reserve Chairman Jerome Powell for raising interest rates and accused China and Europe of manipulating their respective currencies," - RRTS reported.

It will now be interesting to see what Powell hits back with as Central Bankers gather at this week's Jackson Hole where it is highly likely that the theme of the dollar will be a hot topic for discussions at the event. Gillian Tett, Financial Times US managing editor, who has spent time over the years with Powell, suggested to CNBC today that he will not take this lying down and that he may even address the US public directly if such pressures continue to come along. 

Currency action

Meanwhile, the dollar fell to a low of 95.7290 from 96.4020 but the dollar remains above water so long as it remains higher than 94.80. US yields also dropped to 2.81 from 2.87% as equities picked up investor's idle capital placement preferences. 

As for the euro, this ended higher by +0.4% and squeezed higher for the fourth day running. However, the CFTC data has shown that speculative positioning actually turned short for the first time since May 2017, so, speculators are decreasing long positions which makes for a tough time ahead. The price needs to hold at this juncture being 50% of the 2016-18 rally at 1.1448 and get onto the 1.15 handle before time takes its toll. However, there could be some more short covering to go until the end of the week's talks between US and Chinese officials, the FOMC minutes and indeed the Jackson Hole - that brings in a target of 1.1520 to pare back the 10th August supply. 

GBP/USD has had no domestic fundamentals to go with at the start of this week so far, although the no-deal Brexit vibe is still alive and that hinders the pound's progress even in light of a weaker dollar. The pound has been pretty much riding the coat-tails of the euro and that is evident in the cross. GBP/USD, was, however, firm into the close in the North American session and ended at 1.2785, +0.28% from within an NY range of between 1.2788-1.2749 while probing the key 10-D SMA. EUR/GBP ended the NY session at 0.8965 from within Monday's range of between 0.8974-0.8940. Lingering Brexit angst favours the left-hand-side while the BoE is known to be on hold now for the foreseeable future. Brexit talks will have started again this week as the UK's Brexit Secretary will be arriving in Brussels tomorrow after a short summer break. The negotiations will include discussions on future relationship tomorrow and remaining issues on the withdrawal agreement on Wednesday.

USD/JPY was making its lowest close in seven weeks and actually went on to break below the 110 handle marking a low of 109.90 in early Asian trade as the dollar slides a little further across the board in thin markets. It closed NY at 110.06 and below the 110.46 daily Cloud base support. This is a significant move with the price testing below the 100/200-D SMAs around 109.97/88 as yields fall away and the spread narrows. EM derisking is likely to continue to support the yen.

As for the commodity complex, it bounced and the CRB holds in there above the neckline still. However, there remains plenty of risks out there for the sector and indeed EMs are vulnerable to a swift change of hearts in a fickle marketplace at the moment - hanging in the balance of geopolitics and heightened feuds between the US/China, US/Turkey. Copper and metals were a supportive factor in the Aussie's extension to the upside on Monday. China is reported to be looking to increase its infrastructure spending which supports commodity prices, especially metals. AUD/USD climbed for a third day and eyes turn to 0.7360 where the 21-D SMA is located. 

Key notes from the US session:

• Wall Street ends higher led by industrials and energy
• US Pres. Trump: Will criticize Fed if it continues to raise rates
• US Pres. Trump: Not concerned about potential for economic damage to Europe over US tariffs against Turkey
• US Pres. Trump: "No time frame" for ending China trade dispute

Key events in Asia:

"RBA Minutes for the August meeting are released, but as the meeting was held before the annual RBA Anika speech, quarterly Statement on Monetary Policy and semi-annual testimony on monetary policy to Parliament, there won't be anything new to say."