SINGAPORE (Reuters) – The dollar traded above its recent lows against major rivals on Friday, having bounced after U.S. President Donald Trump said he wanted a “strong dollar”, contradicting earlier comments made by Treasury Secretary Steven Mnuchin.
Trump told CNBC in an interview in Davos, Switzerland, on Thursday that he ultimately wants the dollar to be strong, adding that Mnuchin’s comments had been misinterpreted.
The dollar’s bounce pulled the euro away from three-year highs and knocked sterling off its strongest levels since June 2016. The dollar stayed steady against the yen, holding above a four-month low struck on Thursday.
Against a basket of six major currencies, the dollar last traded at 89.176, staying above a three-year low of roughly around 88.43 set this week. The dollar index has slid more than 3 percent so far in January.
Some market participants doubted whether Trump’s comments would be enough to change the recent trend of dollar weakness.
Trump is due to address the World Economic Forum in Davos later on Friday.
Market participants say the dollar has faced headwinds because its relative yield attraction is seen at risk as the world’s major central banks are seen winding up their stimulus. That would change the interest rate dynamics of the past few years when the U.S. Federal Reserve was the only central bank raising rates.
The dollar has also been hampered by concerns over U.S. protectionism.
“My view is that the Trump trade policies, which I think are still going to be maintained, favour a weaker dollar,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.