The Trump administration’s dollar policy is not clear, and the currency’s further near-term strength will depend mainly on the speed of Federal Reserve interest-rate hikes, according to a majority of foreign exchange strategists polled by Reuters.
Since 2017 began, uncertainty over U.S. President Donald Trump’s economic policies has whipsawed the dollar, but continued promises of fiscal stimulus, without details, have sent stock markets to set record highs at breakneck speed.
There has also been widespread confusion over whether the White House prefers a strong dollar, which analysts say is where its proposed policies logically lead.
“We think the market is getting rather tired of the U.S. administration’s flamboyant rhetoric and needs considerable clarity,” said Vasileios Gkionakis, global head of FX strategy at UniCredit.
While on the campaign trail Trump voiced his preference for a weaker exchange rate, new U.S. Treasury Secretary Steven Mnuchin said a stronger dollar reflected confidence in the government’s policies, even though they would probably have a limited impact this year.
“The Trump administration prefers a weak dollar, but its proposed policies – namely, fiscal expansion, limits on imports, and border taxes – will tend to make the dollar stronger,” said William Adams, senior international economist at PNC Financial Services in Pittsburgh.
That has left more than 80 percent of the poll’s more than 60 strategists saying the dollar policy is not clear.