The Australian dollar soared this morning as Donald Trump said the US dollar is too strong.
“US president Donald Trump has again roiled currency markets with his comments on the US dollar,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“As soon as his comments hit the wires, including his comments favouring a low-interest rate and that China is not a currency manipulator, the US dollar came under heavy pressure,”
“His (Trump’s) comments gave the Aussie dollar a big boost, it is now sitting at the .7530 cents level,” McKenna added.
Overnight, Donald Trump was quoted in a media interview saying: “The US dollar is getting too strong ….and partially that’s my fault because people have confidence in me. But that’s hurting — that will hurt ultimately.”
According to McKenna, Trump also had a veiled swipe at multiple administration’s adherence to a strong dollar policy saying “Look, there are some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.”
McKenna also pointed out that “The key was that he (Trump) made it clear that a strong dollar is not consistent with his vision to re-energise American industry.”
From McKenna’s view, there is no misunderstanding that message.
“President Trump is still on message about his plans for the US economy and a stronger dollar is not part of those plans,” he said.
Over the past couple of days, McKenna has pointed out the chances of the Aussie dollar rallying back above the .7550/.7600 level.
He said given the steepness of the recent down move on the Aussie, it has more room to move up.
“The big question for traders now is whether president Trump’s comments will prove sticky or ephemeral and whether the US dollar will regain its footing,” McKenna said.
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