Statement by Donald Trump that a strong dollar puts US at a disadvantage and has led to profit taking by investors after the recent rally of the us currency and a fall in the yuan caused the market decline in risk appetite.
Manuel Oliveri, currency strategist at Credit Agricole, said:
"We think that the dollar has not yet exhausted itself and the upward movement will continue. Positive economic news has provided a good foundation for momentum. Comments of the US President only served as the impetus for profit investors."
Despite emerging market tensions after the interview of Donald Trump to the channel CNBC, positions on the dollar remain balanced for the second week in a row. It grew by more than 5% over the past three months on expectations of further rises in interest rates by the Central Bank of the United States. Current monetary policy is making the US assets more attractive. About this shows the growing investments in the us stock market, which recorded Bank of America Merril Lynch.
Meanwhile, the US President expresses concern and displeasure with the tightening of monetary policy by the Federal Reserve. He believes that the economy and the competitiveness of the american corporations suffering from it. In conclusion, Donald Trump added that he is respectful to the independence of the Central Bank and does not intend to challenge the decisions taken. Commenting on the situation, analysts warn against hasty buying of the dollar and suggest to wait with the investment.
As a result of the Donald Trump's review, the yuan plummeted more than half a percent in London, after which it stabilized. A sharp drop in the Chinese currency stood at around 6,8162. Robobank strategists in their daily note review:
"It seems to us that the game of the yuan is not yet finished. And the Chinese currency has a good chance to catch up with the strong dollar."