Dollar steadies as
traders bet on anodyne Trump conference
Send a link to a friend
[January 10, 2017]
By Jemima Kelly
(Reuters) - The dollar recovered from earlier losses on Tuesday, on the
view the market had over-reacted to worries about U.S. President-elect
Donald Trump's first news conference.
The dollar had fallen as much as 1 percent against a basket of
currencies <.DXY> since the start of the week. Investors had fretted
that Trump - who takes office on Jan. 20 - could shake markets at
Wednesday's press conference by taking an aggressive line on issues such
as trade policy and relations with China.
But the dollar had steadied by 1230 GMT, with the index trading flat at
101.89. The euro, which had earlier hit an 11-day high above $1.06, was
also flat at $1.0580.
Nordea currency strategist Niels Christensen, in Copenhagen, noted that
Trump had taken a relatively conciliatory tone in his victory speech,
and would be more likely to make the kinds of radical, off-the-cuff
comments that investors fear via other channels, such as social media.
"Trump can make remarks more or less all the time, but I think when it
is an official press conference, he will have been briefed and he might
not be as inclined to go off and make some radical statement,"
"So the market had got a bit ahead of itself about the press conference
The dollar index has climbed 4 percent since Trump's election on Nov. 8,
as investors bet his promised program of fiscal expansion will boost
inflation and growth, leading to a faster pace of interest rate rises
from the Federal Reserve.
[to top of second column]
A bank employee counts pound notes at Kasikornbank in Bangkok,
Thailand October 12, 2010. REUTERS/Sukree Sukplang/File Photo
Boston Federal Reserve President Eric Rosengren on Monday called on the
U.S. central bank to step up the pace of its rate increases from the
once-a-year pattern it has pursued since 2015, warning of inflation
risks if it does not.
At a separate event, Atlanta Fed President Dennis Lockhart said it was
too early to judge how the incoming Trump administration may change the
path of the economy.
"The Fed has stressed this enormous uncertainty (around Trump), so ...
the main driver right now (for the dollar) is not monetary policy,
because monetary policy will react to what we’re going to hear from
Donald Trump in the next couple of weeks," said Commerzbank currency
strategist Esther Reichelt, in Frankfurt.
Disquiet over whether Britain will undergo a "hard" exit from the
European Union - in which immigration controls get priority over access
to the single market - kept pressure on sterling, which hit a 10-week
(Additional reporting by Tokyo markets team, editing by Larry King)
[© 2017 Thomson Reuters. All rights
Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.