Jan 27 (Reuters) – The U.S. dollar extended losses to sink to a four-year low against a basket of currencies on Tuesday.
The weakness was exacerbated by President Donald Trump saying the dollar’s value was “great”, when asked whether he thought it had declined too much.
Here are some trader and investor quotes on the dollar’s decline:
STEVE SOSNICK, MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT:
“A weaker dollar is a two-sided coin. On the one hand, it’s good for multinationals, which is why stocks didn’t move too much. If you have operations around the world and foreign currency revenue that will have a conversion advantage when you turn it into U.S. dollars, that will be good. On the other, it makes imported goods more expensive and there might be some inflationary impact from that, which is why we saw a bit of a move in bonds.”
JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL, CHICAGO:
“The dollar is front and center of this sell America trade. It is funny that foreign investors still want to own U.S. bonds and stocks, they just don’t like the dollar, so they’re hedging the dollar exposure of doing that. There is a risk that the dollar falls too much and the Fed has to raise rates to stabilize it.”
MARC CHANDLER, CHIEF MARKET STRATEGIST, BANNOCKBURN GLOBAL FOREX, NEW YORK:
“It’s not just that the President talked about foreign exchange today, but last Friday, it seemed that at least according to our best information, that the Federal Reserve checked on rates and said they were doing it on behalf of the Treasury, making it seem like the Treasury was doing a type of verbal intervention.
“That means that in the past, say, three sessions, you’ve had the Treasury Secretary of the United States and the President of the United States seeming to give people carte blanche to sell the dollar. They were already selling the dollar. … What they did was throw gasoline on the fire.”
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA, ALLENTOWN, PENNSYLVANIA:
“What I think Trump is trying to say is that a lower dollar is good for exports, which he is happy about. But if people are driving the dollar down, they are probably selling Treasuries, which is just going to exacerbate the carry trade unwinding that we’re already seeing. It will also propel gold and silver prices higher still. I don’t think it’s going to lead to a general market tantrum, though.”
STEVEN ENGLANDER, HEAD OF GLOBAL G10 FX RESEARCH AND NORTH AMERICA MACRO STRATEGY, STANDARD CHARTERED, NEW YORK:
“FX market participants are always looking for a trend to jump on. Often officials push back against abrupt currency moves but when the President expresses indifference or even endorses the move it emboldens USD sellers to keep pushing.”
EUGENE EPSTEIN, HEAD OF TRADING AND STRUCTURED PRODUCTS, MONEYCORP, NEW JERSEY:
“I think the reason he was pressed to comment is because, obviously in the last couple of weeks, the dollar has started dipping against most currency pairs. I’ve been saying for the past six months now or maybe a year that the administration wants a weaker dollar. If you think about it, in some capacity, it helps monetize debt and improves the trade deficit, probably more the latter really. The point is, he’s basically making clear that he’s a president that cares about the trade deficit.”
JIM CARROLL, PORTFOLIO MANAGER, BALLAST ROCK PRIVATE WEALTH, CHARLESTON, SOUTH CAROLINA:
“Trump wants U.S. exports to benefit from a weaker dollar. But of course, not every part of the U.S. economy will benefit from a low dollar, so we’ll have to see how that plays out.
“The bigger problem is the way all of this uncertainty plays out. There is nothing markets hate more, but the administration keeps throwing out hand grenades to see how the markets will respond.”
(Reporting by Laura Matthews, Suzanne McGee, Saqib Iqbal Ahmed, Chibuike Oguh; Compiled by Megan Davies; Editing by Jamie Freed)
