Dollar weakens after Donald Trump’s Fed comments

HONG KONG: The dollar dipped Tuesday in Asia after Donald Trump hit out at the Federal Reserve´s interest rate rises and accused it of not backing his economic plan, while most equity markets edged up ahead of highly anticipated China-US trade talks.

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The greenback has been on the ascent in recent months as US borrowing costs have gone up and the economy improves, but it stumbled after Trump´s latest criticism of the central bank.

In an interview with Reuters, the president said he was “not thrilled” with the rate rises under new Fed boss Jerome Powell, repeating comments made last month about the bank´s tightening measures.

When asked if he believed in the Fed´s independence, he refused to say yes, telling the reporter: “I believe in the Fed doing what´s good for the country.”

Trump also accused the European Union and China of manipulating their currencies, adding that Beijing was weakening the yuan to offset the effects of US tariffs.

While analysts said it was unlikely Trump´s remarks would make much difference to the Fed´s decision-making — Powell has said in the past “we don´t take political considerations into account” — the greenback was weaker against most other currencies.

The Fed is expected to raise rates twice more this year.

The pound and euro enjoyed some much-needed buying, while the yen was also up.

Higher-yielding and emerging market currencies — from South Korea´s won and the Indonesian rupiah to the Australian dollar and Mexican peso — were also higher, having come under pressure last week from the Turkey financial crisis.

Stocks rally
After the previous day´s broad gains, equity markets fluctuated as traders turn their attention to the China-US talks, which are due Wednesday and Thursday.

By the close Tokyo was up 0.1 percent, Hong Kong added 0.6 percent and Shanghai rallied 1.3 percent.

Seoul jumped one percent and Singapore and Wellington each gained 0.1 percent, while Taipei and Jakarta also rose. Sydney shed one percent.

In early European trade London and Paris each dipped 0.2 percent, while Frankfurt shed 0.1 percent.

The trade meeting will be the first since the world´s top two economies started imposing tit-for-tat tariffs on billions of dollars´ worth of goods, with the Wall Street Journal saying they are aimed at smoothing the way ahead of a November summit.

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