FX Focus: Dollar tumbles after Trump says the currency is 'too strong'

The dollar remained under pressure on Thursday (13 April), after US President Donald Trump complained of the US currency's ongoing strength.

Speaking to the Wall Street Journal on Wednesday, Trump said the greenback was getting "too strong", adding he would like to see the Federal Reserve keep interest rates low.

"I think our dollar is getting too strong, and partially that's my fault because people have confidence in me," he said.

"But that's hurting [...] that will hurt ultimately. Look, there's some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good. It's very, very hard to compete when you have a strong dollar and other countries are devaluing their currency."

His comments looked to have the desired effect, as they sent the dollar index – which tracks the greenback's strength against a basket of worldwide currencies – to its lowest level since 30 March.

Broadly flat against the yen, the greenback was 0.65% and 0.14% lower against its Australian and Canadian counterparts, trading at AUD$1.3178 CAD$1.3236 respectively. However, the US currency managed to recoup part of the losses against the euro and the Swiss Franc, gaining 0.40% and 0.26% against the duo, to fetch euro 0.9409 cents and CHF1.0054.

"Having spoken out against a weak dollar and the Fed's policies, it looks like someone in Washington has laid out the facts for the president," said Chris Beauchamp, chief market analyst at IG.

"As a result, the US dollar is in retreat across the board. It is, of course, folly to try to work out policy from the president's statements, but the shift to safe havens goes on."

In Britain, meanwhile, the pound too benefitted from Trump's comments, hitting a two-week high of $1.2550 against the dollar, before retreating marginally.

By early afternoon, however, sterling remained 0.39% and 0.26% higher against the greenback and the euro respectively, trading at $1.2540 and €1.1783.

"It appears that the pound/dollar rate is at threat of shying away from an attempt to reach $1.26 before the markets close for the Easter holidays," said FXTM strategist Jameel Ahmad.

"[However] the ongoing uncertainty over Brexit's direction is still enough motivation to maintain a negative mindset towards the pound. Investors are likely to continue utilising sell-on rally opportunities in the cable, when the pair climbs near $1.25 with this being the mindset traders have exploited for months."

Elsewhere, the Australian dollar was the top-performer among the major currencies, finding support from data showing the Australian labour market added more than three times as many jobs as expected in March.

That marked an impressive recovery for the Australian currency, which had hit a 10-week low against the pound in the previous session.