Mnuchin says not concerned where dollar is in short-term

Protections necessary for markets to function properly US

Is this a turning point in gold's fortunes?

"We believe in free-floating currency".

Simon Derrick, chief currency strategist at BNY Mellon, said no US Treasury Secretary in the past 15 years or so "has been quite so blunt in highlighting the advantages of a weaker currency".

"I thought it was balanced and consistent with what I said before, which is we are not concerned with where the dollar is in the short term", Mnuchin said Thursday.

On Thursday, Mnuchin appeared to walk back his comments from the day before.

While Mnuchin's pronouncements rattled nerves already frayed by protectionist talk, they echoed a sentiment voiced repeatedly by his boss, who has long complained that the strength of the USA dollar and weakness of other currencies is behind America's large trade deficit with major trading partners.

Mnuchin's comments sparked concerns that America is abandoning its long-standing strong-dollar policy and wants a weaker currency. But investors have always listened closely to what Treasury secretaries have to say about the USA currency.

"We suspect Mnuchin and other Trump officials got an earful yesterday from Wall Street types who worry about retaliation from countries alarmed at a "beggar thy neighbor" dollar strategy along with tariffs", Valliere wrote.

The US dollar traded at S$1.305, down S$0.0067, as at 1.01pm. While catching investors off-guard with his comments, Trump's support for the dollar may not have been strong enough to reverse gold's uptrend.

He pointed out that the dollar hardly moved after the last Federal Reserve rate hike, signaling that the market had already priced in the additional quarter-percent.

That's different from April when he said the dollar was "getting too strong".

Core Durable Goods Orders rose 0.6%, beating the estimate of 0.5%.

Bloomberg data revealed that as of 11.09 am, the Singapore dollar was trading at 1.306 to the USA dollar, the highest since it closed at 1.3044 on November 28, 2014. It also conflicts with American interests insofar as they risk competitive devaluations elsewhere - witness European Central Bank head Mario Draghi's thinly-veiled rebuttal of Mnuchin immediately after his remarks.

"We will not target our exchange rate for accommodative purposes", he said during the question-and-answer portion of his press conference.

But why would you want to buy USA goods, services, or financial assets in the first place?

Mr Draghi also pushed back on interest rate hike expectations, arguing there was nearly no chance of a move this year - even as some investors were betting on a rise as early as December.

That resulted in the Japan's Nikkei Stock Average trimming an early 0.5% gain back to 0.2%. That's a strong performance by historical standards, yet it was inferior to Germany's Dax, which gained 27.9 percent, and to the MSCI Europe Index, which rose 25.3 percent.

According to Thomson Reuters data through Wednesday morning, earnings growth for the benchmark S&P 500 is expected at 12.4 percent.

Of the 118 companies in the index that have posted results, 78.8 per cent have topped expectations.

Latest News