The US dollar stumbled on Friday after US President Donald Trump ordered US companies to start looking for an alternative to China as Beijing imposed more tariffs on US goods, further exacerbating a prolonged trade dispute between the world’s two largest economies.
That triggered mass selling in the US dollar, which fell from a three-week high against the euro and to one-week troughs versus the Japanese yen.
However, the US dollar strengthened against the Chinese yuan in the offshore market, hitting a two-week high.
“Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA,” Trump wrote on Twitter.
His tweet followed China’s announcement on Friday of retaliatory tariffs on about US$75 billion worth of US goods.
“All of this adds to uncertainty in terms of geopolitics,” said Fran Rodilosso, head of fixed income portfolio management at VanEck in New York. “Obviously, the uncertainty is with regard to global growth and that has been everyone’s chief concern.”
Trump’s comments overshadowed a speech by US Federal Reserve Chair Jerome Powell, who did not announce a major stimulus measure to ease a worsening global economic outlook, but set the stage for further interest rate cuts.
Powell said the US economy was in a “favorable place” and the Fed would “act as appropriate” to keep the economic expansion on track.
“Fed Chairman Powell’s speech at Jackson Hole suggests that he is leaning toward a September rate cut, but he did not lay out a reaction function regarding the Fed’s rate path beyond September,” Rabobank NV senior US strategist Philip Marey said.
Trump was enraged by Powell’s speech, saying he was not sure who was the bigger enemy, the US central bank chief or Chinese President Xi Jinping (習近平).
“As usual, the Fed did NOTHING! It is incredible that they can ‘speak’ without knowing or asking what I am doing, which will be announced shortly,” Trump wrote on Twitter.
“By escalating the trade war, President Trump will get what he wants from the Fed: lower rates,” Marey said.
In Taipei, the New Taiwan dollar fell against the greenback, slipping NT$0.018 to close at NT$31.402, down 0.1 percent from NT$31.366 last week.
The euro on Friday closed at US$1.126, after touching a three-week low of US$1.1052. For the week, it gained 1.5 percent against the greenback.
An index that tracks the US dollar against six major currencies on Friday fell 0.9 percent to 97.26, also down 0.9 percent for the week.
The US dollar fell to a one-week low against the yen at ￥105.4, down 0.9 percent for the week.
Against the Chinese yuan, the dollar closed at 7.08 yuan, after touching a two-week peak of 7.1383 yuan.
Additional reporting by CNA and staff writer
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