Donald Trump Unlocks FX Volatility, Jawbones US Dollar in WSJ Report

The US President is the main trigger behind a sharp decline of the US dollar across the board

Foreign exchange markets volatility has been unlocked after President Donald Trump expressed his worries about a strong US dollar. In an interview with the Wall Street Journal, the President of the United States has mentioned that the currency “is getting too strong”.

The news sparked a selloff across the board, triggering multiple rounds of stops across major currency pairs. The US dollar was on the back foot against all major currencies and against precious metals.

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Not only did President Trump jawbone the US dollar, he also expressed that he prefers low interest rates and the Federal Reserve’s Chair Janet Yellen could remain for a second term. The rhetoric was sharply contrasting when compared to earlier statements made by him during the campaign trail.

“I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting—that will hurt ultimately,” Mr Trump is quoted by the Wall Street Journal.

Competitive devaluations by other countries have been cited by President Trump, but he also shared in the interview that China will not be labeled a currency manipulator. Gold spiked to levels unseen since before the US election.

The interview was co-attended by Treasury Secretary Steven Mnuchin, who shared that Trump is preparing to nominate a new Vice Chairman to the Federal Reserve Board.

Trump has the authority to shift the balance of powers at the Federal Reserve with his upcoming appointments to the Fed’s Board. Dovish members of the Fed have been more defensive and restricted in their comments on the pace of rate hikes on which the central bank has embarked recently.

I any case, foreign exchange brokers should be loving the comments from President Trump as political risks have been the key to FX volatility lately. Trading volumes have increased late in the US session, with precious metals also getting a significant boost.

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