After the comment of President-elect Donald Trump that the strength of the U.S. dollar against China’s yuan “is killing us,” on January 17, investors are more pessimistic about the outlook of the dollar.
For the first time since the 8th of December, traders saw the greenback g down below $1.07 per euro in the first day of U.S. trading since Trump’s comments.
The dollar also went down to a 7-week low of 112.74 yen. Traders say that tweets from Trump regarding criticism of a Republican plan on border tax adjustments as the reason.
Nick Parsons, the head of forex strategy at National Australia Bank said that "Underlying it all is an apparent change of heart from Trump on the border tax and what it might or might not do for the dollar".
"The dollar is down against every one of the majors and the emerging market currencies so it's a clean sweep...Trump's tweets spoke in negative terms about the tax so the dollar has come off as a result."
The dollar experienced an upsurge at the end of 2016 due to expectations of the new administration stimulating economic growth for the United States and bolster demand for the dollar.
Trump’s perfectionist rhetoric is starting to have a bigger effect in the way investors think having labelled China as a currency manipulator.
"I would talk to them (China) first," but "our companies can't compete with them now because our currency is strong and it's killing us," Trump said in an interview with the Wall Street Journal.