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July 21, 2018

Dollar weakens

Ag Reuters

TOKYO: The dollar was on the defensive against the yen and euro early Friday after U.S. President Donald Trump expressed concern about the currency´s strength and the Federal Reserve´s interest rate increases.

Trump said in an interview with CNBC on Thursday that a strong dollar puts the United States at a disadvantage, adding that the Chinese yuan "was dropping like a rock." A strong currency tends to make a country´s exports more expensive.

Trump also showed displeasure about the Fed´s monetary tightening, saying that he was worried about its potential impact on the U.S. economy and American competitiveness.

The White House later said in a statement that the president respects the U.S. central bank´s independence and was not interfering with its policy decisions.

"The market was caught a bit off guard. The discussions and debates around trade policy have not necessarily involved foreign exchange so far," said Shinichiro Kadota, senior FX and rates strategist at Barclays.

"Now it looks like Trump is criticizing yuan and euro weakness and the dollar´s strength. I guess that has taken people a bit by surprise," he said.