Dollar Breathed Easy after Steven Mnuchin Comment

Violet Tucker
April 20, 2017

Last week, in an interview, President Trump said that the U.S. dollar is too strong and it is hurting the economy. This was probably because of the tension mounting from the North Korea front, the upcoming French presidential elections and also due to the economic dialogue that is to take place between the USA and Japan on Tuesday.

It was not that long before that the U.S. dollar had fallen to 108.14 against the yen, which was the lowest price since the middle of November; amid rising tensions over North Korea's heavy desire for Japan's safe currency.

A controversial proposal to tax imports while exempting exports remains on the table as the Trump administration mulls an overhaul of the USA tax code, Treasury Secretary Steven Mnuchin told the Financial Times.

Mnuchin told the Financial Times that he agreed with U.S. President Donald Trump's view that the dollar's strength in the short term was hurting exports, but that he saw the currency's strength over the long term as a positive.

The dollar slipped to 108.35 yen, hitting a five-month low.

At the U.S. -Japan economic dialogue, there are concerns Washington could take a tough trade stance against Tokyo, which has been wary of Trump's complaints that Japan and other countries have artificially weakened their currencies.

The US dollar had an Easter Monday slump, mostly against the yen on geopolitical worries.

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"The talks. are of potentially of significant outcome because the tone taken between the USA and Japan on trade really could give us a better idea about how far the prepared to go down the road of protectionism", said Jane Foley, currency strategist with Rabobank in London.

The main driver for that move, said strategists, was a weaker dollar and the pricing out of the bet that the U.S. Federal Reserve would raise interest rates three times this year.

Tensions over North Korea weighed on the dollar earlier. The setback means United States companies will have a harder time planning their budgets, as it's uncertain they'll get that Trump-promised lower tax rate.

The Australian dollar was one of the worst performing major currencies during today's Asian session after it fell following the release of the minutes of the RBA's April meeting, in which the central bank left rates unchanged.

USD/JPY now trades just under 109, up from the lows of 108.12 it reached on Easter Monday.

Dow e-minis 1YMc1 were down 27 points, or 0.13 percent, with 27,231 contracts changing hands.

Other reports by Guamnewswatch

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