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Dollar Slips After Trump Disagrees with Fed’s Decision to Raise Rates

8/21/2018, 2:01:27 PMBasics of Trading
Dollar Slips After Trump Disagrees with Fed’s Decision to Raise Rates

The U.S. dollar slipped on Tuesday after U.S. President Donald Trump said he disagreed with the Federal Reserve’s decision to raise interest rates.

The U.S. Dollar Index, which tracks the greenback against a basket of other currencies, was down 0.3% to 95.39 by 1:20AM ET (05:20 GMT).

"I should be given some help by the Fed,” Trump said, adding that he believed the Federal Reserve should do “what’s good for the country,”

The Fed is due to meet again in meets to consider rates. Markets widely expect it to raise them in September and also later this year. So far, the central bank has raised rates five times since Trump took office.

Trump also accused China and the EU on Monday for manipulating their currencies.

“I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also,” Trump said in an interview with Reuters published Monday.

Mizuho Securities' Masafumi Yamamoto said Fed officials don't seem to be influenced by Trump's comments. "As long as the U.S. economy is okay...then I think there is no reason to stop the rate hikes from the Fed's point of view," he said.

Reports that China and the U.S. will hold talks this week was also cited as headwind for the dollar as analysts expect the meeting might lead to an easing in trade disputes.

Escalating trade tensions and the recent Turkish lira crisis had pushed the dollar index to 96.984 on Aug. 15, its highest since June 2017.

Meanwhile, the USD/JPY pair was unchanged at 110.08. The pair on Tuesday fell below the psychologically-significant 110 level for the first time since June 28.

Elsewhere, the AUD/USD pair was up 0.3%, while the NZD/USD pair also gained 0.6%.

The CNY/USD slipped 0.3% to 6.8500 on Tuesday after the People's Bank of China (PBOC) set the Yuan reference rate at 6.8360 vs. Monday's fix of 6.8718.