Dollar Retreats After Trump-Inspired Rebound

The Wall Street Journal Dollar Index jumped from 82.82 toward 83.58 in USA afternoon trading.

In the wake of the president's remarks, the dollar trimmed its losses against other major currencies.

His message, which he will proclaim in a speech Friday, is that delegates at the World Economic Forum's annual meeting were wrong to doubt his ability to spur the USA economy and stocks.

Perhaps more than anything, the dollar is beginning to reflect increased concerns of the fiscal health of the USA government.

The exchange rate swung sharply around 1 pm, according to currency exchange tracker XE.com, to a level of 2,812 pesos to the dollar - the strongest the currency has seen since hitting 2,799.5 to the dollar on November 3, 2015.

Johnson named mining company Freeport-McMoRan as his pick for the metals stock for reaping the rewards of a lower USA dollar.

On Wednesday and Thursday, comments from Trump as well as Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross contributed to swings in stock prices and the dollar as investors tried to parse the remarks for indications of administration's stances on the dollar and worldwide trade. The dollar index lost roughly 1% in value, and gold gained over $22 per ounce on that day alone immediately following a comment made by Treasury Secretary when he said "a weak dollar is good for trade".

The Treasury secretary reiterated that the dollar's strength over the long term is reflective of the strength of the U.S. economy.

While the stock market has preferred a weak currency, Bove said it ultimately would drive up borrowing costs, CNBC quoted him as saying. The dollar was down 1 per cent on Wednesday against a collection of other major currencies, to a three-year low. Mnuchin's comments were very matter-of-fact.

Following Mnuchin's remarks, the U.S. currency took its largest tumble in 10 months, and the ramifications of the Trump administration's policy position on the dollar raised alarm.

In the early 80s the dollar got really, really strong, so in late 1985 a bunch of big countries signed the Plaza Accord to bring the value of the dollar back down to earth.

Banking analyst Dick Bove reportedly claims the Trump administration's weak-dollar policy threatens to halt the bull-run stock-market rally raging into record territory since the 2016 election.

That's different from April when he said the dollar was "getting too strong".

Although Donald Trump later said Mnuchin had been misinterpreted, the dollar remained lower.

Mnuchin said during a CNBC-moderated panel that the dollar can fluctuate and he is not concerned by the current weakness, but "in the longer term" believes in the "strength of the dollar".

The euro had reached that peak after European Central Bank President Mario Draghi said economic data pointed to "solid and broad" growth with inflation likely to rise in the medium term.

  • Leroy Wright