The US Dollar continued to slide Thursday until a fairly emphatic intervention in Davos from President Trump. The USD index against a basket of major currencies had fallen almost 4 per cent so far in January; its worst start to any year since 1987 and reached a low point of 88.21, down more than half a percent on the day. During the evening, in an interview with CNBC, President Donald Trump said, "the dollar is going to get stronger and stronger and ultimately, I want to see a strong dollar," He added further that Treasury Secretary Steven Mnuchin's comments were taken out of context. The USD index jumped from 88.40 to 89.25, though overnight it has fallen around half a point to be back at 88.75.
Earlier in the day, Treasury Secretary Mnuchin played down his comments that a weaker dollar was “good for us as it relates to trade and opportunities”. Mnuchin told reporters, “I thought my comment on the dollar was actually quite clear yesterday. I thought it was actually balanced and consistent with what I’ve said before, which is, we are not concerned with where the dollar is in the short term.” Mnuchin said there were “both advantages and disadvantages of where the dollar is in the short-term” and stressed that the United States wanted fair economic competition. “We want free and fair and reciprocal trade. So, I think it’s very clear. We’re not looking to get into trade wars. On the other hand, we are looking to defend America’s interests.”
President Trump’s keenly-awaited speech to the WEF is due later this morning. Ahead of it, the US Dollar index opens in London at 89.50 whilst US 10-year bonds are down 2bp in yield at 2.62%.