President Trump Wades In On The USD, CNY & Fed Hikes
We sensed the USD moves, particularly against the Chinese Yuan would not go unnoticed and President Trump has confirmed that by commenting on the level of the USD, which has been on the rampage again today. London traders came in to see the greenback tearing a path higher against CNY (onshore, CNH offshore) and immediately replicated the moves against the rest of the majors, taking the DXY above 95.50. Highs were pushed to a few ticks shy of 95.70 before we pulled back again, and after some stabilisation below 95.50, the president spoke of the disadvantageous nature of a higher USD as well as criticising the rate hikes by the Fed. He considers them a hindrance to the 'good work' being done to stimulate the economy.
NY traders have reacted nervously as USD/JPY takes the brunt of the hit, trading back towards 112.00. Support was seen ahead of the figure level, though we suspect Asia will be in no mood to carry the pair higher again save for any fresh rhetoric from the president. Once again, rapid currency moves are being pinpointed, much as the EUR/USD was under scrutiny when the exchange rate was continuously knocking on the door of 1.2500. The ECB was a little less forceful in their assessment of the state of the market, though excessive moves in the current economic climate concern all governments and central banks.
The market has paid little heed to this and we suspect there will be a selective pick up in USD buying tomorrow at some stage. However, traders may need to be a little cautious about determining how far is too far and just as importantly, how quickly.