Dollar hits one-week low as
'Trumpflation trade' fades
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[February 24, 2017]
By Jemima Kelly
(Reuters) - The dollar hit a one-week low on Friday and was set for its
first week of falls in three, as the "Trumpflation trade" that took the
greenback to 14-year highs earlier this year faded, and as worries over
France's presidential election eased.
The euro, meanwhile, was set for its first week of gains in three,
having been lifted by a new alliance between French presidential
candidate Emmanuel Macron and fellow centrist Francois Bayrou. That
soothed fears that anti-EU, far-right leader Marine Le Pen could win
A poll on Friday suggested Macron would win 23 percent of the vote share
in a first round of voting on April 23, behind Le Pen's 26 percent, but
would then win in the final run-off, with a 61 percent share.
The euro rose after the poll, hitting a four-day high of $1.0618 <EUR=>,
well clear of a two-month low below $1.05 hit earlier in the week.
With little else in the way of new developments, analysts said investors
were still focused on comments on Thursday from U.S. finance chief
Steven Mnuchin, who said any steps the new administration takes on
policy would probably have only a limited impact this year, and that he
wants to see tax reform passed by August.
The comments, made in Mnuchin's first televised interviews since taking
office last week, suggested that much work was still needed on key
elements of the sweeping tax reform plan, one of the policies investors
had been reckoning would boost consumer prices and drive up U.S.
"To me one thing that stood out was his saying that the tax reform was
probably only going to be passed by August," said Commerzbank currency
strategist Esther Reichelt.
"Trump had signaled he would present something in the next two or three
weeks and this had been one of the supportive factors for the dollar and
the whole reason why Trumponomics has been so supportive. It being
postponed further into the future increases uncertainty."
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U.S. dollar notes are seen in this November 7, 2016 picture
illustration. REUTERS/Dado Ruvic/Illustration
The dollar fell as much as 0.4 percent against a basket of other major
currencies on Friday to 100.68 <.DXY>.
It had already been knocked earlier in the week by minutes from the U.S.
Federal Reserve's latest policy meeting that were less hawkish than some
investors had expected.
"Ultimately outside of the U.S. there is reflation happening and data is
looking strong, so perhaps itís time to just take some dollar longs off
the table," said UBS Wealth Management currency strategist Geoffrey Yu
"We need additional information to sustain (the 'Trumpflation trade')."
Digital currency bitcoin hit a record high of $1,220 in Asian trade on
speculation that a bitcoin ETF is set to get approval from the U.S.
regulator, before edging back to trade at around $1,175 by 1310 GMT <BTC=BTSP>.
(Additional reporting by Tokyo markets team; Editing by Hugh Lawson)
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