Homepage / Investment / The dollar's terrible week is a warning of what could come if Trump's team missteps on trade
Les Gambling establishments en Ligne en France 2024 200% Reward + 300 Free Rotates LevelUp Internet casino Melbourne En İyi ve Güvenilir Casino Siteleri Canlı Casino Siteleri 2023 Listesi En İyi ve Güvenilir Casino Siteleri Canlı Casino Siteleri 2023 Listesi Le meilleur casino en ligne franзais Extra Casino avec le dйpфt minimal le in addition bas Yeni Casino Siteleri ᐈ Çevrimiçi Kumarhaneler Mart 2024 Les gambling establishments en ligne proposent une grande variйtй de jeux de internet casino gratuits. Türkiye’deki Resmi Web Sitesi Google Play, Türkiye’de kumar oyunlarına izin verecek Her Gün Tatil Olsa ORDU’DA PAZARTESİ GÜNÜ FINDIK FİYATI NASIL? كازينو اون لاين الكازينوهات الممتازة على الإنترنت ألعاب الكازينو المباشرة مينا كازينو العر Google Play, Türkiye’de kumar oyunlarına izin verecek Domain Sorgulama & Domain Fýrsatlarý Canlı Casino Siteleri: 2024 Güvenilir Siteler Seçilmiştir Golden Easter Slot İncelemesi 2024, Demoyu Ücretsiz Oynayın Golden Easter Slot İncelemesi 2024, Demoyu Ücretsiz Oynayın 1xbet Türkiye Giriş Empieza Kayıt 202 Kumar Ve Kumarhaneler Hakkında Pek İlginç 21 Bilgi Kumarhane Doğru Yazımı Nedir? Tdk Ile Kumarhane Kelimesinin Doğru Yazılışı! Mobilbahiste En İyi Kumar Bonusları Ve Kazançlar Mobilbahis Giriş Sayfası On Line Casino Siteleri En Iyi Casino Siteleri 2024 Mostbet: Türkiye’de Internet Casino Mostbet Online Slotlar Ve Canlı-casin Pin Up Casino Oyna Türkiye, Pinup’un Sah Web Sites Ifade Haberleri Son Dakika Ifade Hakkında Güncel Haber Ve Bilgiler “önceliğimiz Transferin Önünü Açmak, Görüştüğümüz Yerler Var” On Line Casino Nuh’un Gemisi Deluxe Resort & Spa, Kıbrıs Bonus Veren Siteler 3 000 Den Fazla Online Oyunu Ücretsiz Oyna En Tehlikeli Kumar Oyunu Ekşi Sözlük Deneme Bonusu Veren Siteler Deneme Bonusu 2024 Explore the Magic of WildCardCity Güvenilir Bahis Siteleri En İyi Kumar Siteleri Balıkesir Triatlonuna Avrupadan Ödül Tricks of the Aviator gambling establishment game by Spribe Çevrim Içi Kumar Siteleri “bonus” Yalanıyla Kandırıyor En Güvenilir Canlı On Line Casino Siteleri Xbetting-tips Com Uncovering the Abundant Tapestry of Ozwin Gambling establishment Evaluating Board Portal Providers Uncovering the Wealthy Tapestry of Ozwin On line casino Electronic Data Area Providers Evaluation Cobra Internet casino: Raising the Australian On the internet Video gaming Practical experience 4 Things to Search for in Safeguarded Cloud Safe-keeping Fastpay On line casino Australia – Simple and No-Taxation Wagering Web page officielle franзaise de Joka Gambling establishment The Software Development Universe Game Woo Internet casino – Enjoy Slot machine games around australia Ostdeutsche Biersorten What Are Virtual Data Rooms? Vitamin D Receptor Polymorphisms Revue du Casino BlackLabel Faktory, kterй ovlivnujн hodnocenн ceskэch online kasin How to Make the Most of Your Web Development Organization and Advertising Efforts L’essor des casinos en ligne en France Boost Meeting Efficiency With Boardroom Technology Developments WildJoker Casino WildCardCity On line casino – Guaranteed Australian Gambling Portal WildCardCity Casino – The Ideal On the internet Gambling establishment within australia Modern Technologies Produce Sharing Documents Online Faster and More Protect Free Virtual Info Room pertaining to Speedy Due Diligence A Review of Data Area Software For people who do buiness Five Board Bedroom Features Which will help You Acquire a More Productive Boardroom Electronic Systems To your Business Understanding Legal Terms and Laws in Today’s World The Laws and Contracts of Hollywood: A Sunset Blvd. Tale Legal Discussion Between Johnny Cash and Antonin Scalia Legal Insights: What Teens Should Know Legal Issues and Exceptions: What You Need to Know Legal Insights and Expert Analysis Celebrity Dialogue: Legal Matters in the 21st Century Famous Personalities Discuss Legal Issues The Boys in the Boat: Legal Advisors and The Quest for Legal Knowledge Understanding Legal Matters: Q&A on Criminal Law, Joint Ventures, and More Enticing Title The Departed: Understanding Basic Work Requirements and Legal Rights Youth Slang Blog Article Legal Insights: A Journey into the World of Law The Ins and Outs of Legal Matters: Everything You Need to Know Legal Insights and Trends: A Rap Guide Mysterious Legal Matters Unveiled Insights and Information: Understanding Various Laws and Regulations Famous People of the 21st Century The Circle of Legal Life The Intersection of Fashion Law, Legal Translation, and THC Oil: A Modern Legal Guide Legal Q&A: Understanding Joinder Federal Rules and More Understanding Legal Terms and Conditions: A Comprehensive Guide Understanding Legal Documentation in a Fun Way! Understanding Legal Aspects: From Islamic Law of Inheritance to Farm Law Protests Understanding Legal Rights: A Guide to Legal Regulations and Requirements Understanding Legal Guidelines and Agreements Famous 21st Century People in Conversation Mysterious Legal Matters Unveiled Legal Matters and Real Estate: A Conversation Between Cameron Boyce and Donald Trump Understanding Legal Expertise and Why It Matters Legal FAQs and Expert Services Understanding Legal Ramifications: Common Law Ontario Health Benefits and More The Ins and Outs of Legal Requirements: From FBI Academy Physical Requirements to Silver Lake Fishing Rules The Legal Underworld: Understanding the Significance of Laws and Rights Legal Conversations: A Dialogue Between Jon Jones and Chadwick Boseman Legal Beats: Bobcats, Real Estate, Babysitting, and More

Investment

The dollar's terrible week is a warning of what could come if Trump's team missteps on trade

U.S. officials created a small firestorm with their dollar comments in the chilly air of Davos this week, but a much more important factor for the future of the currency will be what they say and do about trade when they leave Switzerland.

Strategists say the dollar could consolidate now after its latest bout of weakness, and the focus will now be on whether the Trump administration can pursue its goal of new, fair trade agreements without sparking trade wars and new currency volatility.

The dollar index has been in a year-long decline, defying forecasts that it should strengthen from the fact that the Federal Reserve is raising interest rates and normalizing monetary policy faster than its counterparts. But the opposite has happened, and the dollar weakened as flows increased into the euro and yen, as those economies improved, and central bankers in Europe and Japan look closer to removing their own heavy handed accommodation.

Then this week, U.S. Treasury Secretary Steven Mnuchin stirred the pot, with a possibly innocuous comment to journalists at the annual World Economic Forum about dollar weakness being good for U.S. trade. To markets, that sounded like a not very subtle endorsement of the falling dollar and a step away from the long-running U.S. policy of verbally supporting a strong dollar. The comment also took on more significance since it was made at the Davos confab, dubbed the ‘epicenter of globalization’ by one strategist.

“The dollar had a terrible start to the year way before Mnuchin came in and made those comments. The trend didn’t come from that, so we obviously had some volatility down and up this week on the back and forth from that. I don’t think the trend is about that. It’s about global growth, about the shift in some capital flows, such as Chinese capital flows, and that’s separate from whatever that one sentence comment was that was made by Mnuchin and others,” said Jens Nordvig, CEO of Exante Data.

Mnuchin’s comments also came just as the U.S. launched trade sanctions against Chinese solar panels and South Korean washing machines. Crucial trade talks were also underway this week in Canada, as the U.S., Mexico and Canada try to reshape the 24-year-old NAFTA agreement. The Treasury secretary’s comments triggered not so subtle criticism from Europe’s central bank head Mario Draghi about unnamed officials talking down their currency.

Mnuchin and later President Donald Trump tried to walk back the weak dollar comments. Trump triggered a temporary rally in the dollar Thursday, when he said on CNBC that Mnuchin’s comment was taken out of context and the dollar should get stronger with the U.S. economy. On Friday, Mnuchin, also on CNBC, used some of the exact language of his predecessors—that a strong dollar was in the “best interests” of the country.

But the market continues to sell the dollar, and some strategists expect that to continue this year, even after a period of possible consolidation. The dollar index touched a new three-year low Friday.

It could accelerate if Trump takes broader trade actions that are seen as protectionist.

“The next focus for markets is whether Trump pivots to a much more protectionist, isolationist policy, or he tries to play a little bit better in the global game,” said Mark McCormick, North America head of foreign exchange strategy at TD Securities.

Trump, in the past, has kicked off his own dollar selloff. Just before his inauguration, he discussed how he liked a weaker dollar, and the dollar index has lost more than 11 percent since then. A weak dollar is a double-edged sword— good for multinational profits and selling U.S. goods abroad but bad for U.S. dollar assets, like Treasurys.

“The tone we got this week was the dollar was front and center for Davos. You’ve had back and forth on Mnuchin and Trump and Mnuchin again on what actual dollar policy is. I think everyone’s fully aware Trump has had a preference for a weaker dollar, whether there’s anything they can do or not to accelerate it,” said McCormick. “It’s clear they have a focus on bilateral trade deficits.”

Trump did promote his ‘America first’ policies at Davos, and in a speech said that does not mean America goes it alone. He also said the U.S. was looking for fair trade, as he touted the growth of the U.S. economy, the stock market’s performance, the new GOP tax law and the fact that the U.S. is ‘open for business.’

“It’s the most important thing to watch,” said Nordvig of evolving U.S. trade policy. He said if NAFTA is dissolved, it would be an immediate negative for the peso but the dollar would lose flows to Europe and Japan. It would also be negative for the record setting stock market.

“We saw the solar stuff this week. It was expected. The next thing to watch is the next installment. It’s pretty unpredictable,” said Nordvig. U.S. officials have warned other actions are coming.

Alan Ruskin, Deutsche Bank head of G-10 currency strategy, sees some consolidation after the dollar’s fall and the sharp increase in the euro, up 1.7 percent this week. But he too says the markets are keeping a close eye on trade, and whether the Trump administration makes moves beyond the actions its already taken on specific products.

“What we’ve been looking for is a shift back to the point where rates matter and carry matters. So far, we haven’t seen that for quite some time. There are a lot of different balls in the air, as far as currencies are concerned,” said Ruskin. “There’s trade related issues coming to the fore now, particularly as they relate to the U.S. and China. This is an opening gambit. There’s a bigger story in the background.” Ruskin said the market is watching the U.S. trade relationship with China, and the fact the U.S. has significant issues with China, including on intellectual property rights.

Nordvig said the currency market has been making some interesting moves when it comes to China. “

“What’s really remarkable, in the last month we’ve had a big move in the dollar. We had a big move in the dollar against a lot of crosses. China had a big move, and we track the invention and thers’ no intervention whatsoever. This is alike a historic thing because they used to always intervene when the currency was getting stronger. The fact they are not doing anything is a very big deal,” he said, noting countries are very careful now about being interventionalist. “I think they realize if they want to have a reserve currency over time, they want to have a flexible currency. If they stop their appreciation, there’s one way risk. It can only go down. I think they want to have two-way risk.”

As the dollar flounders, the market has focused on the fact that other currencies, like the euro and yen are becoming more attractive as reserve currencies, though the U.S. is so important it is not expected to lose its reserve status.

But the concern has been that dollar assets could lose their appeal if the dollar becomes too weak, if the Trump administration really does want to talk down the green back. McCormick said there was some speculation that the Trump administration weak dollar comments were a response to the reports earlier this month that China was considering cutting back on Treasury purchases because they are no longer as attractive and because of Trump trade policies. China is the largest holder of Treasurys, but it’s not expected to back out of the Treasury markets in a significant way.

“I think if they started to pick a trade war with China that would be super dollar negative against euro and yen. But high beta currencies, like emerging market currencies , would also not perform well in that environment,” McCormick said.

He said NAFTA is a test case for how the U.S. may behave on the broader world stage. “It will be interesting to see how Trump goes back home to a different audience, how he talks on trade whether he is more bellicose,” said McCormick, adding the upcoming Congressional midterm elections may shape how Trump talks about trading partners.

Trump gave a surprise nod to the possibility of U.S. joining a multilateral trade deal when he has pushed the idea of bilateral deals when he said he reconsidering joining the Trans Pacific Partnership. Trump withdrew from the multilateral trade pactlast year and says he’d reconsider if the U.S. could get a better deal, but analysts were skeptical anything would come of that.

Source: Investment Cnbc
The dollar's terrible week is a warning of what could come if Trump's team missteps on trade

Comments are closed.