US Dollar Sinks as President Trump Hits Fed on Hikes
- President Trump is ‘not thrilled’ about recent rate hikes
- Concerned Fed rate hikes may put US at disadvantage versus counterpart central banks
- Says he put a ‘very good man’ at the head of the Federal Reserve in Jerome Powell
In highly unusual commentary on the Federal Reserve from the White House, US President Donald Trump expressed his dislike for the Fed’s recent rate hikes. In his exact words, the President said he’s “not thrilled” with rate hikes and worries that work done by his administration will be nullified.
Although he does not approve with recent hikes, President Trump followed up by saying he put a “very good man in” at the Fed. Federal Reserve Chairman Jerome Powell has raised rates twice this year, with two more increases projected to come, saying he believes the economy is strong enough for the Fed to continue on its recent path.
Still, President Trump voiced concern that the higher rates and a stronger dollar may put the US at a disadvantage while Fed counterparts in the Bank of Japan and the European Central Bank keep rates low, maintaining loose monetary policy. The President acknowledge the unusual nature of his comments but pressed on, saying he has held the same viewpoint since being a private citizen. The Fed has been independent from political interference during its existence, so comments direct as these will undoubtedly stir debate.
DXY Index Price Chart: 10-minute Timeframe (July 19, 2018 Intraday) (Chart 1)
While not only stirring debate, the comments also had an immediate effect on markets with the dollar basket erasing a rally posted earlier in the day. An individual pair in the dollar-yen, nearly mirrored the effect seen in the basket. Before the President’s comments, the pair hovered around 112.850 but subsequently dropped to 112.115 before staging a rebound as the comments were digested.
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---Written by Peter Hanks, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.