MUFG Research discusses the impact of the latest verbal intervention from President Trump on the USD.
"In a wide-ranging speech at the Conservative Political Action Conference in Maryland, President Trump repeated criticism of Fed policy and the resulting strong US dollar. In particular he described Fed Chair Powell as a “gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, and we have a gentleman that likes a very strong US dollar”," MUFG notes.
"It is not the first time and is unlikely to be the last time that President Trump has attempted to talk down the US dollar. Nevertheless, we expect the verbal intervention to continue having limited negative impact on the US dollar...In these circumstances, it is difficult to see the Fed resuming rate hikes anytime soon especially as it has also indicated more tolerance to allow higher inflation in the near-term as well," MUFG adds.