The US dollar has started the week on a strong note, recovering some of its losses from the previous week, in part thanks to comments from President-elect Donald Trump that surprised many in the financial markets, Reuters reports.
Unlike his previous stance, where he openly advocated for a weaker dollar as a strategy to reduce the US trade deficit, Trump’s recent remarks suggested a shift in his approach, signaling that he may not exert pressure on the currency going forward.
The market reacted positively to Trump’s comments, interpreting them as an indication that his administration may not be focused on weakening the dollar, which has historically been a tool for trade negotiations. As a result, the dollar gained ground against several major currencies, including a notable 0.5% increase against the yen, reaching over 150.50 yen per dollar. This is a sharp contrast to recent remarks from Japan’s central bank, which had sparked expectations of potential interest rate hikes in Japan.
Meanwhile, the Chinese yuan fell to a three-month low against the dollar, as Trump’s remarks were seen as strengthening the greenback’s appeal. The shift in sentiment on the dollar comes at a time when global markets are closely watching central bank actions. In the US, economists are predicting a modest rebound in job growth for November, with a likely increase of around 195,000 jobs, which could influence the Federal Reserve’s stance on interest rates during its December meeting. A rate cut remains a possibility, depending on upcoming data, though there is a strong chance of continued policy tightening in Europe.
Trump’s recent support of a strong dollar marks a notable departure from his previous rhetoric. During his first presidential campaign and early years in office, he frequently criticized a strong dollar, believing it contributed to the US trade imbalance. However, this new tone may help stabilize market expectations, as traders now perceive a lower likelihood of currency manipulation or aggressive moves to undermine the dollar’s value.
