U.S. President Donald Trump has never been one to mince words and his latest comments were the latest to shake the markets. On Monday President Trump said in a Reuters interview that he was “not thrilled” with the Federal Reserve for hiking interest rates, a comment that sent the dollar to the day’s lows just before closing time on Wall Street.
The dollar index was down 0.34 percent as of 10:00 a.m. HK/SIN, trading at 95.57 .DXY after hitting a low of 95.78 late on Monday night. The dollar declined 0.11 percent against the yen to 109.94 early on Tuesday, while the euro gained 0.33 percent against the dollar to trade at $1.1518.
Trump’s comments came only four days before Federal Reserve Chair Jerome Powell’s annual address to the Jackson Hole Symposium. Trump has previously sent conflicting messages about Powell, saying that he was “not thrilled with Powell,” while also calling Powell a “good man.” The president has not been shy about voicing his opinion that a strong dollar is bad for U.S. exports and that the Fed should help him boost the U.S. economy. He has also commented that even though he has said that he will not tell the Fed what to do. The question now remains as to whether the Fed will give into Trump’s whims or will exert its independence by keeping its long-term policy on course. As Reuters analysts pointed out, American presidents in the past few decades have rarely criticized the Fed because the central bank’s independence is critical for the country’s economic stability. It is hardly surprising that the current outspoken president has broken the decades-long presidential silence when it comes to the Fed, nor is it surprising that Trump has said he will continue to criticize the central bank as needed.