Trump Slams Europe, China on FX
Trump Slams Europe, China on FX.
Trump tweeted Wednesday that Europe and China are playing a “big currency manipulation game”, just a few days after he declared a tariff ceasefire with Chinese President Xi Jinping.
His call to “Match, or continue being dummies who sit back and politely watch other countries continues to play their games” has strategists considering the U.S. Treasury could intervene to weaken the dollar.
“The obsession with currency manipulation — a month after the last Treasury report had different conclusions — means we should be prepared for anything,” said Bipan Rai, CIBC’s North American head of foreign-exchange strategy. “The Treasury hasn’t intervened to weaken the dollar for decades, but we wouldn’t be surprised if that changes potentially under Trump.”
“I wouldn’t be surprised if jawboning was to increase in coming months,” Doyle said in an interview with Bloomberg Television. “Generating inflationary pressures, generating competitiveness through a lower currency is one tool that central banks can use to support their economies and it’s the only game in town at the moment.”
“The president is likely to get his way at least for the time being,” foreign-exchange strategist Ben Randol said via email.
“However, the problem arises if U.S. economic outperformance continues and the dollar proves accordingly resilient,” he said. “In that case, the temptation to intervene in FX markets will increase if Fed cuts don’t do the trick.”
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