It appears America's 'strong dollar policy' is over. President Trump just commented that "other countries take advantage of America by devaluation," and then Trump directly named China and Japan as "planning money markets," presumably implying manipulation.
And the reaction in the dollar is clear...
Erasing all the post-ECB, post-Fed gains...
The Dollar Index has broken a key trendline...
Last night, Nancy Pelosi and "Fake Tears Chuck Schumer" held a protest at the Supreme Court over Trump's recent immigration ban which has sparked mass protests around the country and ultimately led to the firing of the acting Attorney General Sally Yates last night.
Unfortunately, there were some logistical issues with the protest which Trump has seized upon this morning via Twitter:
The Trump administration just fired the first shot in the US-European currency, and thus trade, wars when Trump's top trade advisor Peter Navarro accused Germany of using a “grossly undervalued” euro to "exploit the US and its EU partners", the FT reported noting the comments are "likely to trigger alarm in Europe’s largest economy." News of the statement sent the EURUSD surging and the dollar tumbling to fresh 2 month lows.
In addition to creating mass chaos in America's airports and general confusion around the world, Trump's immigration ban is putting Saudi Arabia, a key ally in the middle-east, in a fairly awkward position. Per the Wall Street Journal, Trump's immigration ban, which currently does not include Saudi Arabia, has put the country in the awkward position of having to manage a desire to pursue stronger ties with the U.S. at the risk of alienating key allies, like Yemen and Sudan, that will inevitably view such a move as abandoning Muslim neighbors.
What a difference a week makes.
On January 23, Reuters reported that dialing back the Volcker Rule which limits banks' ability to engage in speculative investments using their own balance sheet, has emerged a top priority for President Donald Trump's nominee for U.S. Treasury secretary, Steve Mnuchin. In written responses to questions posed by members of the U.S. Senate Finance Committee, Mnuchin said he would use his role as head of the interagency Financial Stability Oversight Council to give the Volcker Rule a stricter definition of proprietary trading.