CURRENCIES: Dollar Plunges To 3-year Low After Mnuchin Cheers Weaker Greenback
January 24 2018 - 5:45AM
Dow Jones News
By Sara Sjolin, MarketWatch
British pound tops $1.41
The dollar suffered a renewed selloff on Wednesday, with a key
dollar index falling to a three-year low after U.S. Treasury
Secretary Steven Mnuchin said a weaker greenback is good for
trade.
What are currencies doing?
The ICE U.S. Dollar Index , which measures the buck against a
basket of six rival currencies, slid 0.5% to 89.666, breaking below
the 90-handle for the first time since December 2014.
The euro rose to $1.2349 from $1.2298 late Tuesday in New York,
trading at the highest level in more than three years.
The pound jumped to $1.4097 from $1.4000 late Tuesday. Sterling
touched an intraday high of $1.4119 after U.K. labor market data
showed the unemployment rate remained at a 4.3% in November, the
lowest level since 1975.
The greenback also declined against the yen , buying Yen109.60
compared with Yen110.31 on Tuesday.
What's driving the market?
The dollar was already falling early on Wednesday, but was put
under increased selling pressure after Mnuchin in Davos said he
wasn't concerned about the currency's recent decline. Instead he
said a weaker greenback "is good for us as it related to trade and
opportunities," breaking with the usual strong dollar policy.
Mnuchin has advocated for a weaker dollar before, arguing it
puts the U.S. in a better position on trade. President Donald Trump
has also been vocal about his desire for a weaker dollar, saying
back in April the buck was "getting too strong."
Read more:Trump is waving adios to the longstanding 'strong
dollar policy'
(http://www.marketwatch.com/story/trump-is-waving-adios-to-the-longstanding-strong-dollar-policy-2017-01-17)
What are strategists saying?
"The long-term trend for the dollar is negative and once more
its support seem to be breaking down which is impacting across
financial markets," said Richard Perry, market analyst at Hantec
Markets, in a note.
"Everything is going against the dollar at the moment and this
is being reflected on the charts. An oversold dollar rally seems to
be not forthcoming. However, it will be interesting to see how
markets react to potential trade wars bubbling up, after Donald
Trump slapped tariffs on solar cells and washing machines into the
U.S. Under his 'America First' mantra, Trump is looking to reduce
the size of the U.S. trade deficit, something that plays on a
weaker dollar," he added.
(END) Dow Jones Newswires
January 24, 2018 05:30 ET (10:30 GMT)
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