Mnuchin says weaker dollar helps United States trade in short term

APTOPIX-Financial-Markets-Wall-Street-116

Trader George Ettinger works on the floor of the New York Stock Exchange Wednesday Jan. 24 2018. ASSOCIATED PRESS

"I believe everyone has already noticed that at the end of previous year China has taken real steps to greatly loosen its financial industry, market access and others", she said.

Asian stock markets are mostly lower on Thursday amid concerns over trade wars, while the US dollar fell following Treasury Secretary Steven Mnuchin's comments that a weaker greenback would be good for USA trade.

It was always an unspoken rule that the executive branch would also tout the "Strong Dollar" policy while privately wishing for the mercantilist dream of currency devaluation.

International Monetary Fund managing director Christine Lagarde had earlier on Thursday urged Mr Mnuchin to explain, adding that United States tax cuts will probably cause the dollar to rally.

Todd Mattina, a chief economist at Mackenzie Investments, said Mnuchin's comments about the greenback were surprising because he was basically breaking with the long-standing "strong dollar policy" in the U.S.

Separately, European Central Bank President Mario Draghi speaks after an ECB meeting at 8:30 a.m. ET in Frankfurt, and he most certainly will be asked about the euro's stunning rise against the greenback.

The dollar is weaker Wednesday after Treasury Secretary Steven Mnuchin said the declining dollar is good for US exporters.

Speaking to reporters at the World Economic Forum (WEF) annual conference in Davos on Thursday, Mr Mnuchin: "I thought my comment on the dollar was actually quite clear yesterday".

Oh, and the nascent trade war between the Trump Administration and countries like China, Canada and Mexico.

Stocks-Fall

Mnuchin's comment on Wednesday prompted one of the biggest daily falls in the dollar in years.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.15 per cent while Japan's Nikkei fell 0.8 per cent, hit by the dollar's decline against the yen.

It was down half a percent against a basket of currencies in European trade.

What are the downsides of a weak global reserve currency?

Among oil stocks, Oil Search is rising 0.6 percent, Woodside Petroleum is advancing 0.5 percent and Santos is up 0.3 percent after crude oil prices extended three-year highs overnight. His comments were seen by markets as a departure from traditional U.S. currency policy.

By now the number is far, far greater. That comment shook the foreign exchange market and sent the dollar skidding to its lowest level in three years.

U.S. West Texas Intermediate futures CLc1 settled up $1.14, or 1.8 percent, to $65.80.

"To the extent that global growth is solid and a sizable portion of S&P earnings are earned overseas, I don't look at this as being dollar negative at all", said Joseph LaVorgna, chief economist for Americas at Nations in NY. "We're honing in on the 2017 high around $1,357, which is going to be the next big level". We're not looking to get into trade wars. Spot gold XAU= was up 1.4 percent $1,360.23 an ounce. Nvidia dipped $3.25, or 1.4 percent, to $235.66 and Applied Materials gave up $1.20, or 2.1 percent, to $56.59.

Latest News