Trump's Fed Comments Dent Dollar
Mohammad Ali (@ChaudhryMAli88) Published August 21, 2018 | 06:24 PM
The dollar fell versus the euro and yen Tuesday after US President Donald Trump hit out at the Federal Reserve's interest rate rises, accusing it of not backing his economic plan, while most equity markets climbed looking ahead to China-US trade talks.
London, (UrduPoint / Pakistan Point News - 21st Aug, 2018 ) :The Dollar fell versus the euro and Yen Tuesday after US President Donald Trump hit out at the Federal Reserve's interest rate rises, accusing it of not backing his economic plan, while most equity markets climbed looking ahead to China-US trade talks.
The dollar, on the ascent in recent months thanks to Fed rate rises and a robust US economy, stumbled after Trump's latest criticism of the central bank.
In an interview with Reuters, the president said he was "not thrilled" with the rate rises under new Fed boss Jerome Powell, repeating comments made last month about the bank's tightening measures.
"The dollar has slipped in response to President Trump's comments, though the underlying upward trend remains intact," VTB Capital economist Neil MacKinnon said on Tuesday.
"Most Fed-watchers are of the view that Powell is emphasising the need for financial stability and with a positive US economic backdrop is obliged to tighten policy. There is little indication that he will accede to any demands from President Trump to halt monetary tightening," he added.
When Trump was asked if he believed in the Fed's independence, he refused to say yes, telling the reporter: "I believe in the Fed doing what's good for the country." The Fed is expected to raise rates twice more this year.
Higher-yielding and emerging market currencies -- from South Korea's won and the Indonesian rupiah to the Australian dollar and Mexican peso -- were also higher against the dollar Tuesday, having come under pressure last week from the Turkey financial crisis.
In his interview, Trump accused the European Union and China of manipulating their currencies, adding that Beijing was weakening the Yuan to offset the effects of US tariffs.
Traders were meanwhile turning their attention to the China-US talks due Wednesday and Thursday.
The trade meeting will be the first since the world's top two economies started imposing tit-for-tat tariffs on billions of Dollars' worth of goods, with the Wall Street Journal saying they are aimed at smoothing the way ahead of a November summit.
They also come despite Washington continuing to push through fresh measures slated for Thursday.
However, JP Morgan Asset Management global market strategist Tai Hui said: "Given the little progress made on the US-China negotiations in the past six months, investors' expectations are still low.
"Ongoing negotiation is good news, and that's what the market is riding on at this stage, but a sustainable agreement to end this tension still seems unlikely at this point."He added: "If China's earlier offer to buy US products and open up its market did not convince the US to de-escalate, it would take more creativity from Beijing to reach a compromise."
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